ONTARIO
ENERGY
BOARD
FILE NO.:
EB-2005-0551
EB-2006-0322
EB-2006-0338
EB-2006-0340
VOLUME:
2
DATE:
March 6, 2007
BEFORE:
Pamela Nowina
Presiding Member and Vice Chair
Cathy Spoel
Member
Paul Vlahos
Member
NGEIR Motions and Threshold
Question
EB-2005-0551
EB-2006-0322
EB-2006-0338
EB-2006-0340
THE ONTARIO ENERGY BOARD
IN THE MATTER OF the Ontario Energy Board Act, 1998,
S.O.1998, c.15, Schedule B;
AND IN THE MATTER OF a proceeding initiated by the
Ontario Energy Board to determine whether it should
order new rates for the provision of natural gas,
transmission, distribution and storage services to
gas-fired generators (and other qualified customers)
and whether the Board should refrain from regulating
the rates for storage of gas;
AND IN THE MATTER OF Rules 42, 44.01 and 45.01 of the
Board's Rules of Practice and Procedure.
Hearing held at 2300 Yonge Street, 25th Floor,
Toronto, Ontario, on Tuesday,
March 6, 2007, commencing at 9:06 a.m.
-------------Volume 2
-------------B E F O R E:
PAMELA NOWINA
PRESIDING MEMBER and VICE CHAIR
CATHY SPOEL
MEMBER
PAUL VLAHOS
MEMBER
A P P E A R A N C E S
MARY ANNE ALDRED
Board Counsel
DAVIT AKMAN
Board Staff
GLENN LESLIE
SHARON WONG
Union Gas Limited
DAVID STEVENS
FRED CASS
Enbridge Gas Distribution
ROBERT WARREN
APRIL BROUSSEAU
Consumers Council of Canada
PETER THOMPSON
IGUA
MICHAEL JANIGAN
Vulnerable Energy Consumers'
Coalition
PAT MORAN
APPrO
KENT THOMSON
DAVID AKMAN
for the Staff of the
Ontario Energy Board
ALICK RYDER
JIM GRUENBAUER
City of Kitchener
JOHN DeVELLIS
School Energy Coalition
LAURIE SMITH
JIM REDFORD
Market Hub Partners Canada
I N D E X
O F
P R O C E E D I N G S
Description
Page No.
Upon commencing at 9:06 a.m.
1
Preliminary Matters
2
Submissions by Mr. Leslie
Submissions by Mr. Cass
2
24
Recess taken at 10:46 a.m.
On resuming at 11:11 a.m.
54
54
Submissions by Mr. Smith
54
Luncheon recess taken at 11:40 p.m.
On resuming at 1:05 p.m.
69
69
Preliminary Matters
69
Submissions by Mr. Akman
Reply Submissions by Mr. Warren
Questions by the Board
Reply Submissions by Mr. Thompson
Questions by the Board
71
81
100
101
115
Recess taken at 2:44 p.m.
On resuming at 3:00 p.m.
124
124
Reply Submissions by Mr. Moran
Questions by the Board
Reply Submissions by Mr. Ryder
Questions by the Board
124
145
149
154
--- Whereupon the hearing adjourned at 3:54 p.m.
155
E X H I B I T S
Description
EXHIBIT NO. J2.1:
GAS DISTRIBUTION
Page No.
DOCUMENTS BOOK OF ENBRIDGE
24
EXHIBIT NO. J2.2: BOOK OF AUTHORITIES OF MARKET
HUB PARTNERS CANADA LIMITED
55
EXHIBIT NO. J2.3: ONTARIO ENERGY BOARD DECISION
OF EB-2005-0292, MOTIONS DAY, BEFORE MR. KAISER
71
EXHIBIT NO. J2.4: SUBMISSION MATERIALS OF CC AND
VECC, HEARING DAY 2
82
U N D E R T A K I N G S
Description
Page No.
No undertakings were entered during the conference
1
1
Tuesday, March 6, 2007
2
--- Upon commencing at 9:06 a.m.
3
MS. NOWINA:
4
Good morning, everyone.
Please be seated.
Today we will continue the
5
oral submissions of the parties with respect to three
6
motions to review aspects of the Board's November 7, 2006
7
EB-2005-0551 decision with reasons in the Natural Gas
8
Electricity Interface Review proceeding.
9
Today we will hear the submissions of Union Gas,
10
Enbridge Gas Distribution, and Market Hub Partners.
11
these submissions, we will give moving parties an
12
opportunity for reply.
13
After
I would like counsel for the responding parties to
14
give me an estimate of their time, and I will hold you to
15
those times, as I did other parties yesterday.
16
Mr. Leslie.
17
MR. LESLIE:
18
No,
seriously, about 45 minutes.
19
MS. NOWINA:
20
Mr. Cass.
21
MR. CASS:
22
In that case, three hours.
Thank you, Mr. Leslie.
Madam Chair, my objective is to complete in
under an hour, if I can.
23
MS. NOWINA:
24
Mr. Smith.
25
MR. SMITH:
I'll write down an hour, Mr. Cass.
Madam Chair, unless the two speakers who
26
precede me do something truly outrageous, we would expect
27
to be finished in under an hour.
28
MS. NOWINA:
Thank you.
And I'll ask about times for
ASAP Reporting Services Inc.
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(416) 861-8720
2
1
reply after we've heard those submissions.
2
Are there any preliminary matters?
3
PRELIMINARY MATTERS:
4
MR. AKMAN:
5
Madam Chair, I just wanted to say that
Mr. Thomson --
6
MS. NOWINA:
7
MR. AKMAN:
Your mike isn't on.
My apologies.
Mr. Thomson had a
8
longstanding prior commitment and couldn't be here today,
9
and I am giving the Panel his apologies for not being able
10
to be here for the second day of the hearing.
11
MS. NOWINA:
That's fine.
Thank you.
12
Mr. Leslie.
Are you going to begin?
13
SUBMISSIONS BY MR. LESLIE:
14
MR. LESLIE:
15
The only materials I think I will refer you to are the
Yes, thank you.
16
Board decision itself, including the appendices to that
17
decision -- or one appendix, I should say, which is the
18
Union Gas settlement agreement, and I will refer you to
19
portions of our factum, as well.
20
With respect first to the threshold test, we agree
21
entirely with Board Staff counsel's analysis of the scope
22
and grounds for review.
23
out, the only possible basis on which the threshold could
24
be satisfied in this case is a showing that there's been an
25
error of fact within the meaning of rule 44 of your Rules
26
of Practice.
27
28
As Board Staff counsel pointed
And in that regard, we also agree very strongly that
to qualify, that error of fact must be clearly evident, or,
ASAP Reporting Services Inc.
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3
1
as Mr. Thomson said - Mr. Kent Thomson said - clearly
2
extricable from the record, and cannot turn on an
3
interpretation of conflicting evidence.
4
the error of fact must be, in the words used by courts of
5
appeal, palpable and overriding.
That is to say,
6
It's not sufficient for the applicants to say they
7
disagree with the Board's decision and that, in their view,
8
the Board got it wrong and they've got an argument that
9
should be reheard.
They must show you that the Panel was
10
clearly and demonstrably wrong in the way that Mr. Kent
11
Thomson illustrated yesterday when he gave the example of
12
the light that was green and the finding was that it was
13
red, all the evidence being to the contrary.
14
15
Were it otherwise, all the decisions of the Board of
any importance would be subject to review.
16
What the applicants in this case are suggesting, in my
17
submission, is that their desire to re-argue their cases is
18
sufficient to warrant a review, and, in my submission, if
19
that were the test, virtually every case could be re-argued
20
pursuant to section 44.
21
If you accept that the test is an error of fact in the
22
sense that has been described, then, in my submission, none
23
of the applicants has even come close to demonstrating an
24
error of fact of the kind required to meet the threshold
25
for review under your rules.
26
Now, as I say, I don't intend to add to anything Mr.
27
-- try to add to anything Mr. Kent Thomson said yesterday
28
about the threshold test.
I want to turn now to whether or
ASAP Reporting Services Inc.
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(416) 861-8720
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1
not the applicants have met that test in more detail, and
2
I'll start with the submissions of APPrO.
3
And with respect to APPrO, there was -- you should
4
understand, members of this Panel, that there was only one
5
issue between APPrO and the utilities, Union in particular,
6
and that issue is clearly defined in the settlement
7
agreement between Union and APPrO that was submitted and
8
approved by the Board at the outset of its formal hearing.
9
And that settlement agreement is appendix F to the Board's
10
reasons for decision.
And if you could turn that up, I
11
wanted to refer you briefly to some portions of the
12
settlement agreement.
13
Just by way of background, the impetus for the
14
hearing, really, initially, was a need to deal with the
15
unique requirements of gas-fired generating facilities.
16
That's why it was called the Natural Gas Electricity
17
Interface Review.
18
intended to deal with most of the issues relating to that
19
subject matter.
20
issues.
21
outstanding, and that issue was price.
22
And this settlement agreement was
In fact, it did deal with most of the
There was only one issue that was left
That's clear, if you look at page 9 of the agreement,
23
paragraph 1.1.
This is the preamble to a settlement
24
regarding services that Union had agreed to provide to ex-
25
franchise customers with intra-day balancing requirements
26
such as the gas-fired generating stations, primarily the
27
gas-fired generating stations, primarily APPrO's
28
membership.
ASAP Reporting Services Inc.
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(416) 861-8720
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1
2
And you'll see that in parentheses the paragraph
begins:
3
"This is a partial settlement.
4
Union's proposal that F24-S, UPBS, and DPBS be priced
5
at market-based rates, the parties agree that the
6
issue of market-based storage pricing is within the
7
ambit of issue number 2, storage regulation, and,
8
accordingly, beyond the scope of this settlement."
9
Issue number 2 being the one issue that the Board said
10
should not be the subject of a settlement but would need to
11
be dealt with in a hearing.
12
whether the Board should forbear from regulation.
13
With the exception of
That was the whole issue
So that makes it clear that those -- the issues
14
relating to those services and the demand for those
15
services had all been settled, except for the question of
16
price.
17
18
And that's acknowledged again at page 13 of the
agreement at the bottom of the page, the last sentence:
19
"Union will require approximately 24 months to build
20
additional storage deliverability to provide new
21
incremental high deliverability ..."
22
And then the services are listed.
23
And in parentheses
again:
24
"Recognizing that it is Union's position that
25
development of those services are contingent on
26
resolution of the storage pricing issue."
27
Then, similarly, with respect to in-franchise
28
services, on the next page, page 14, paragraph 1.2 deals
ASAP Reporting Services Inc.
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(416) 861-8720
6
1
with high-deliverability service, and this is a service for
2
in-franchise customers.
3
And the same qualification appears:
4
"Complete settlement, with the exception of Union's
5
proposal to price firm deliverability greater than 1.2
6
percent at market-based rates.
7
the issue of market-based storage pricing is within
8
the ambit of issue number 2, storage regulation, and
9
accordingly beyond the scope of this settlement."
10
The parties agree that
So the issue between APPrO and the issue relating to
11
power services generally was limited to the question of how
12
these services would be priced.
13
In the case of in-franchise customers, deliverability
14
greater than 1.2 percent, which is the norm, Union's
15
proposal being that anything greater than that would be
16
market-based rates, and the APPrO proposal being that those
17
services should be provided at incremental cost.
18
19
20
All the other issues between those parties were
settled.
Now, for APPrO to suggest that the Board erred within
21
the meaning of rule 44 with respect to that issue, that
22
they somehow missed that issue, is, frankly, in my
23
submission, absurd.
24
25
26
And if I may, I'll take you to the decision at page 66
in order to deal with that suggestion.
The Board dealt with the one issue, at page 66 to page
27
70 of its decision.
The heading is "New storage services
28
including high-deliverability storage."
And the Board
ASAP Reporting Services Inc.
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(416) 861-8720
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1
begins by setting out the fact that the issue concerns new
2
storage services and, in particular, high-deliverability
3
storage services.
It notes that:
4
"Union proposed high-deliverability storage services
5
and three ex-franchise services."
6
And then it lists the services that have just been
7
described to you in paragraph 1.1 of the settlement.
8
The Board notes:
9
"These services are of particular interest to
10
dispatchable gas-fired power generators - indeed, were
11
developed in response to generator requests - because
12
they provide the means by which these customers can
13
conduct intra-day balancing."
14
The Board clearly appreciated the nature of the issue.
15
It was intra-day balancing; it was high-deliverability
16
services.
17
matter in issue.
So the Board properly identified the subject
18
The decision continues:
19
"The storage requirements for dispatchable gas-fired
20
power generators are very different from existing
21
customers.
22
for seasonal or daily balancing, dispatchable
23
generators want to use storage for intra-day
24
balancing."
25
And then it goes on, in the next paragraph, to
26
describe the settlement proposals which I've just read to
27
you and notes in the last sentence:
28
Whereas, existing customers use storage
"What remained unresolved was the pricing for the new
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(416) 861-8720
8
1
high-deliverability storage services."
2
And, as I've said, that was the only issue.
3
Then the Board correctly sets out the differences
4
between the parties:
5
"The utilities propose to offer these services at
6
market-based rates and proposed that the Board refrain
7
from regulating the rates for these services."
8
That was Union's position, that the Board should not
9
regulate the price of those services.
10
In the next paragraph, APPrO's position is described:
11
"APPrO argued the utilities have an obligation to
12
provide the services because the allocations at 1.2
13
percent standard deliverability space have been
14
agreed.
15
the utilities for acquiring the services.
16
view of storage in other geographic areas is not an
17
option because all the other transmission systems are
18
limited to the four NAESB nomination windows."
19
NAESB is NAESB.
20
Then it continues throughout that paragraph to
Power generators have no options other than
APPrO's
21
summarize the arguments advanced by APPrO over the course
22
of the hearing.
23
yesterday from Mr. Moran.
Those are the same arguments you heard
24
Then on the next page, 68, the Board summarizes
25
Union's position in opposition to APPrO and also the
26
position of the marketers who appeared at the hearing,
27
appeared or filed argument.
28
And then, on page 69, the Board's findings appear.
ASAP Reporting Services Inc.
(613) 564-2727
(416) 861-8720
9
1
The Board notes that:
2
"There is no disagreement the services were necessary.
3
The generators have convincingly expressed the
4
importance of these types of services to the effective
5
functioning of their operations, both physically and
6
financially.
7
29 context is how best to achieve this objective."
8
Or, in other words, how to make sure the services
9
10
The issue for the Board within a section
would be available.
I should say in that regard, Union's evidence was that
11
unless the company could price those services at market
12
rates, they would not be able to attract the capital to
13
develop the facilities that would ensure those services
14
would be available, and the Board accepted that position
15
based on the evidence.
16
Down below in the next paragraph - and this is
17
particularly important, I think - with respect to some of
18
the submissions Mr. Moran made yesterday.
19
the second sentence.
20
"Board Findings":
And I focus on
This is the second paragraph, under
21
"The Board concludes that these services are
22
substantially different from the bundled, unbundled
23
and semi-unbundled distribution services offered by
24
Enbridge and Union.
25
services from Marketers - for example, BP and Nexen -
26
and likely others.
27
that the generators hold is in excess to their needs,
28
they expect to be able to offer this excess into the
There is demand for these
In addition, when the capacity
ASAP Reporting Services Inc.
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1
competitive market."
2
That was the evidence.
The generators were asked
3
whether they would return excess supply of these services
4
to the supplier, and they said, No, no, we'll keep those
5
and we'll sell them into a competitive market, at market
6
prices.
7
8
9
That's what the Board's talking about in this
paragraph.
And the Board concludes:
10
"It follows that they expect to be able to acquire
11
these services through the competitive market, as well
12
as sell them."
13
So when the suggestion is that these services couldn't
14
be duplicated or there was no competition for these
15
services, that's clearly wrong, and this evidence was all
16
before the Board and the Board is dealing with it in these
17
passages.
18
Then the Board notes:
19
"The Board could order the utilities to provide these
20
services on a regulated basis.
21
concludes this would not be the best approach to
22
ensuring development of these services.
23
consideration is to ensure that new, innovative
24
services are developed and offered.
25
concludes that the best way to ensure this public
26
interest is met to is to refrain from regulating these
27
services.
28
these services by the utilities and other providers.
However, the Board
The key
The Board
This will stimulate the development of
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1
The Board finds that competition in these services
2
will be sufficient to protect the public interest."
3
Then I'll skip the next paragraph, and the paragraph
4
below says:
5
"Pricing considerations are relevant, but the Board
6
finds that the development of competitive options will
7
provide appropriate price protection for these
8
consumers."
9
That is, the APPrO membership, the gas-fired
10
11
generators.
And here I would refer you to paragraph 14 of our
12
factum, which deals with the evidence on the question of
13
competition for these services.
14
but it does give you the references.
15
I won't read it to you,
I think it's important to understand -- Mr. Moran put
16
it to you that you couldn't separate deliverability from
17
the storage space itself, and physically that's true, his
18
point being that you can't have competition and
19
deliverability, because you have to have the space to go
20
with the deliverability.
21
What that obfuscates is that there are substitutes for
22
deliverability and storage space that are available, such
23
that a gas-fired power generator can acquire their intra-
24
day balancing needs and meet them, from sources other than
25
the utilities.
26
Board's talking about in this passage.
27
28
And that was the evidence.
That's what the
The marketers said, Look, we can make these kinds of
services available to these people.
If they want gas on a
ASAP Reporting Services Inc.
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1
demand basis, we can get it to them.
2
tell you how we do it, because that's our business, but we
3
can do it.
4
And that is a substitute for deliverability and that's
5
what the evidence was about.
6
alternatives.
7
We're not going to
It was about substitutes and
And in some ways, the best evidence that this was a
8
competitive market was the evidence given in another case,
9
the Greenfield Energy case, and that's noted in our factum
10
and it was noted in my submissions to the Board when this
11
case was argued on the evidence, because what happened in
12
that case was the power generator in question said, Look,
13
we don't want to have to deal with Union, because we can
14
get these kinds of services outside of Union more
15
expeditiously and cheaper than we can get them from Union.
16
So they didn't even need Union.
So for Mr. Moran to
17
suggest that we're the only market for this, the only
18
supplier, is just on the evidence not correct.
19
what the Board was dealing with.
20
And there's no error in this.
21
Board was right.
22
no error.
23
issue.
24
dealt with it.
25
And that's
In my submission, the
But even if they weren't right, there's
They understood the issue.
They dealt with the
Mr. Moran just doesn't agree with the way they
Now, Mr. Moran said, They never answered our question.
26
Well, his answer is in the next paragraph.
The Board said
27
it would refrain from regulating the rates for new storage
28
services, and that's why there is nothing in the tariff
ASAP Reporting Services Inc.
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about it.
2
there's no answer to my question in the tariff.
3
Mr. Moran says, There's nothing in the tariff;
Of course not, because the Board isn't regulating the
4
price of these services.
5
provision of the service.
6
they will continue to provide a monitoring facility to make
7
sure that the utilities do this in the way that they've
8
undertaken to do it.
9
The Board is regulating the
They note in their decision that
But they're not regulating the prices, and they're not
10
regulating their price either of the high-deliverability
11
storage service, which is the in-franchise service, or of
12
the other services I've mentioned, which are the ex-
13
franchise services.
14
And that's the answer to Mr. Moran's question.
15
only issue was:
What's the price?
16
price will be the market price and the Board is not
17
regulating it.
The
And the answer is:
The
18
To suggest the Board didn't deal with the issue that
19
APPrO -- that existed between APPrO and the utilities is,
20
as I've said, just nonsense.
21
that the Board was somehow careless in dealing with the
22
very issue that was the impetus for the hearing in the
23
first place.
24
It's incredible to suggest
Next I want to deal with Kitchener's submissions, and
25
I think Mr. Ryder has really acknowledged in his
26
submissions that all that Kitchener is proposing to do is
27
re-argue their case before a new panel.
28
Kitchener does not say the Board did not understand
ASAP Reporting Services Inc.
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1
the issues or the evidence.
2
that the Board, in their view, got it wrong.
3
at the outset, a mistake of fact of the kind you are
4
dealing with here cannot turn on an analysis of conflicting
5
evidence.
6
subjects.
7
Their position is, really,
And there was a great deal of evidence on these
Kitchener's panel testified at some length.
8
cross-examined.
9
these subjects at some length by Mr. Ryder.
10
11
And as I said
They were
The Union witnesses were cross-examined on
The Board
heard all that evidence.
The allegation that the Board failed to consider
12
whether Union's proposed allocation methodology for storage
13
space - which is the aggregate excess methodology in this
14
case - met Kitchener's needs, is just not correct.
15
baseless.
16
It's
The Board did consider that in some detail.
And for that, I will take you, with your permission,
17
to page 94 of the decision.
And I'll start with the second
18
full paragraph, which the text reads:
19
"In this proceeding, Kitchener claimed that the
20
aggregate excess method does not provide sufficient
21
cost-based storage base for a gas distributor like
22
Kitchener.
23
storage space that ..."
24
And then it set out the two requirements which
25
Kitchener had established for itself, and those are the
26
same requirements that Mr. Ryder described to you
27
yesterday.
28
It argued for an allocation of cost-based
And then skipping the next paragraph, the Board
ASAP Reporting Services Inc.
(613) 564-2727
(416) 861-8720
15
1
continues:
2
"Kitchener made a number of arguments about why it
3
believes the aggregate excess method is the wrong way
4
to calculate its allocation of cost-based storage
5
space.
6
the aggregate excess method assumes normal weather.
7
Kitchener says that the allocation of cost-based space
8
for an embedded distributor must provide for the
9
possibility of a colder-than-normal winter and provide
Kitchener's main objection seems to be that
10
protection for a cold snap after March 31.
11
also asserted that the aggregate excess method
12
understates the amount of storage required by Union
13
itself to serve its bundled customers, and Union
14
rectifies that problem by purchasing winter gas.
15
Kitchener charged that such a strategy results in
16
significant additional costs for Union's system gas
17
customers."
18
Those are the same arguments Mr. Ryder gave you
19
20
Kitchener
yesterday, in summary.
And then the Board sets out Union's position on this
21
issue, and then the findings are at the bottom of page 95,
22
section 6.2.2; that's of the decision:
23
"The Board expressed its view that the objective of
24
allocating cost-based storage to unbundled and semi-
25
unbundled customers is to assign an amount that is
26
reasonably in line with what that customer is likely
27
to require.
28
precisely the amount that a particular customer claims
The objective is not to allocate
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1
it might need.
2
seasonal balancing assumption that underlies the
3
aggregate excess methodology might be materially at
4
odds with the way that some customers use storage."
5
And that refers to the fact that, for example,
6
gas-fired generators don't use storage for seasonal
7
balancing.
8
Board was recognizing that here and differentiating those
9
kinds of customers from customers like Kitchener.
10
The Board also acknowledged that the
They use it for intra-day balancing.
And the
And the Board notes that they directed Union to
11
develop different allocation methods for customers with
12
unique needs for storage.
13
And then the Board goes on:
14
"The issue is whether Kitchener has made a compelling
15
case that its use of storage is so different from the
16
assumed use underlying the aggregate excess method
17
that Union should be required to develop an allocation
18
method just for Kitchener.
19
Kitchener has not successfully made that argument."
20
And then it goes on on that page at some length to
21
explain why it doesn't think Kitchener has successfully
22
made that argument:
The Board finds that
23
"Kitchener acknowledges that it requires storage for
24
seasonal load-balancing, which is consistent with the
25
assumptions of the aggregate excess method.
26
Kitchener's circumstances are vastly different from
27
those dispatchable gas-fired generators.
28
"The Board does not agree that the allocation of
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cost-based storage should be determined assuming
2
colder-than-normal weather."
3
And then in the final paragraph:
4
"The Board does not see the relevance in Union's gas
5
supply plan due to an allocation formula used to
6
assign cost-based storage to unbundled or semi-
7
unbundled customers."
8
Now, I'll note that those are all the arguments that
9
you heard from Mr. Ryder yesterday about why the Board was
10
wrong.
He was repeating, reiterating, the arguments that
11
he made in the main case in order to convince you that he
12
had an arguable case in support of his position and that
13
the whole matter should be reconsidered and that the
14
hearing we went through all last spring and last summer and
15
last fall should be treated as a dress rehearsal.
16
my submission, that's simply not on.
And in
17
Rule 44 doesn't contemplate that sort of thing at all.
18
It is incumbent on Mr. Ryder to show that the Board clearly
19
missed something or clearly made a mistake of fact which is
20
significant to the outcome, and there's no showing of that
21
kind whatever, and, in my submission, Kitchener's
22
application should be dismissed for those reasons.
23
Now, with respect to -- and I'll deal with IGUA, VECC,
24
and the Consumers Coalition of Canada together.
And here,
25
again, I adopt -- we adopt entirely the submissions of
26
Board Staff counsel on the allegations of bias that have
27
been made and on the question of the Board's jurisdiction
28
to conduct these proceedings.
I don't think I can usefully
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1
add anything to what Mr. Kent Thomson said on those issues
2
yesterday.
3
With respect to the request for a new panel, or the
4
submission that all of this should be dealt with by a new
5
panel, in a way that suggestion is an appropriate test,
6
because the error to qualify under rule 44 that is to be
7
demonstrated should be so obvious that even a new panel
8
would have no difficulty recognizing it.
9
construct, I'll agree that that might be a good test. Would
As a hypothetical
10
a new panel have any difficulty seeing, recognizing, the
11
error of fact, the mistake, that gives grounds for a
12
review?
13
However, in this case, that suggestion is completely
14
inappropriate.
15
which, apart from the preliminary proceedings, the
16
Technical Conferences, which were part of the record,
17
involved 14 days of evidence, the appearance and testimony
18
and cross-examination of eight expert witnesses, five
19
detailed expert reports.
20
alone, which took up much of the time during the case, was
21
highly specialized and the subject of extensive cross-
22
examination.
23
What we're talking about here is a case
The evidence on competition
There was very lively debate about what the
24
appropriate tests were here and what the relevant facts
25
were and how these things should be dealt with and the
26
nature of the secondary market and the extent of the
27
secondary market.
28
The fact that BP was called was an indication of the
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need to get some evidence of how these things actually
2
worked in practice, apart from how experts thought they
3
might work.
4
The Board got that evidence, got it from BP, and they
5
got it in a very graphic way from GMI, both during their
6
evidence in-chief and during their cross-examination.
7
Mr. Warren's suggestion that credibility is not an
8
issue and that you can deal with all these issues simply on
9
the written record and the documents, is, in my submission,
10
wrong.
11
evidence.
12
You had to be there in order to appreciate this
There are always subtleties in the way the evidence
13
evolves, in the way it’s given.
That's the reason for the
14
rule "He who decides must hear."
15
must decide, as Mr. Rider had it yesterday.
16
hear and don’t decide.
17
hear,” and there is good reason for that rule.
18
appreciate this evidence fully without having been there,
19
seen the witnesses, heard the cross-examination.
It's not you or he who
Lots of people
The rule is “He who decides must
You can't
20
Now, all the topics that were raised or canvassed by
21
Mr. Warren, Mr. Janigan, and Mr. Peter Thompson yesterday
22
were fully canvassed during the hearing, and all of them
23
are dealt with in the decision.
24
arguments yesterday apart from the question of jurisdiction
25
and bias, which were not raised during hearing.
26
There were no new
IGUA admits as much in their factum at paragraph 10,
27
where they say the grounds for review are what they regard
28
as errors in the Board's decision.
That is to say that
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IGUA does not agree with the decision.
It thinks it's
2
wrong; it thinks the Board should have given more emphasis
3
to the evidence that it led; that it should have conducted
4
the analysis in a different way than it did.
5
made all those points to you yesterday.
Mr. Thomson
6
The fact is – and, in my submission, the Board did it
7
right - the analysis they conducted was perfectly correct.
8
It was the orthodox analysis.
9
But the point here is there's no mistake of fact.
10
It's simply a question of whether or not you agree with the
11
Board's decision.
12
that basis alone he should get a rehearing in front of a
13
new panel.
14
15
Mr. Thompson doesn't, and he says on
In my submission, that is not what rule 44
contemplates.
16
The errors that are being alleged by IGUA, VECC, and
17
CCC boil down to being unhappy with the Board's decision.
18
They do not give any evidence to question the Panel's
19
findings.
20
arguments that were considered and rejected by the Panel.
21
The Panel dealt with the issues that were raised
They simply make assertions and reiterate
22
yesterday.
Just to deal with the principal ones, on the
23
question of status quo, it was submitted that the Board
24
didn't deal with the prospect of just maintaining the
25
status quo.
26
within the range, the Board did deal with that.
27
with it at page 50.
28
wouldn't be developed if you did that.
Having a range rate and market-based rates
They dealt
The evidence was that the new storage
There was the
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evidence from the witnesses, and it was accepted, and the
2
Board deals with that at page 50.
3
So it wasn't that they ignored the status quo or
4
failed to consider it at all; they considered it and she
5
accepted it said evidence that that wasn't a practical
6
solution.
7
The allocation of the premium.
That's dealt with by
8
the Board at pages 104-106 of its decision, and also at
9
page 80.
It's not that they ignored the issue or were
10
insensitive to it, as Mr. Janigan would have it.
11
Mr. Janigan's argument really boils down to he doesn't
12
agree with the Board.
13
different tack based on American jurisprudence; that
14
jurisprudence was in front of the Board.
15
those cases extensively.
16
He thinks they should have taken a
We argued all of
The Board in its decision deals with the Atco
17
decision, which was argued at some length.
18
with that issue.
19
with what they did in the end, but there's no mistake.
20
There's no mistake.
The Board dealt
You may not agree
What we're talking about here is a mistake of the kind
21
where people say, How could I possibly have made that
22
mistake?
23
of that in the Board's analysis of these issues.
24
How could I have done that?
And there's nothing
The competition analysis which Mr. Thompson attacked
25
yesterday, that's found at pages 24-41 of the Board's
26
decision.
27
the Board did not adopt his submissions and didn't adopt
28
the evidence of his expert, Mr. Stauft, on how these things
Mr. Thompson says the Board did it wrong because
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2
should be dealt with.
I'll point out there were a number of other experts
3
who testified who didn't agree with Mr. Stauft.
4
was a question about qualifications, and the other experts,
5
I'll submit, were far more qualified to deal with these
6
issues than Mr. Stauft.
7
And there
The Board didn't ultimately deal with it on that basis
8
at all.
They summarized Mr. Stauft's evidence, they
9
summarized the other evidence, and they dealt with the
10
analysis in the same way that the Bureau of Competition
11
would do it; in the same way that is done by other
12
regulators.
13
case they said it's storage and other products, but we will
14
limit it to storage because we can't quantify the other
15
products; we don't have enough evidence to know how
16
material they are.
17
They define a product market, which in this
Then you look at the geographic market.
18
talks about the transactional location.
19
everything at Dawn.
20
That's wrong.
Mr. Thompson
He would have
What you do is you try to figure out
21
what products are available in the market that are
22
substitutes for storage, and where you can get them from,
23
what the range is geographically of where you can get them
24
from.
25
available from Michigan, what was available from New York,
26
how the people made use of those storages, how they could
27
exchange storage in Michigan for storage in Ontario.
28
That's the basis on which the Board found the geographic
And there was a lot of evidence about what was
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market extended well into the United States.
2
And then they do what you're supposed to do when
3
you're doing this kind of an analysis; they looked to
4
concentration levels to determine whether there was active
5
competition.
6
different hubs to see whether the prices correlated in a
7
way that would suggest that those hubs were communicating
8
with each other.
9
They looked at the correlations between
All of this went on.
For Mr. Thompson to suggest the Board simply didn't
10
understand, and that Mr. Stauft, if they'd listened to
11
Mr. Stauft, they would have got it right - that's no doubt
12
his view - but that's not a mistake.
13
accept Mr. Stauft's approach to this thing.
14
view, they rightly didn't accept it; it was wrong.
15
As I've said, I don't intend to deal with the
They just didn't
And in my
16
substance of every argument that was made yesterday,
17
because to do that would really be to engage in the review
18
that's being sought.
19
detail on the competition issues, because they took up most
20
of the time during the hearing, but I don't want you to
21
misunderstand.
22
with you yesterday was dealt with in detail in this
23
hearing, and the Board deals with them in their decision
24
and I've given you the references.
I've tried to give you a little more
Every one of the issues that was raised
25
And there's no error of fact of a kind that would give
26
rise to a need for review or warrant a review under rule 44
27
of your Rules of Practice.
28
And those are my submissions.
Thank you.
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MS. NOWINA:
Thank you, Mr. Leslie.
We don't have any
2
questions for you, Mr. Leslie, so we'll move on to
3
Mr. Cass.
4
SUBMISSIONS BY MR. CASS:
5
MR. CASS:
6
Madam Chair, Enbridge Gas Distribution did provide a
Thank you, Madam Chair.
7
documents book for today's purposes.
8
volume, for which I apologize, with a clear cover over a
9
white cover.
10
11
It is a fairly large
I don't know if that's been given an exhibit
number yet.
MR. SCHUCH:
Madam Chair, it has not been assigned an
12
exhibit number, so I suggest we assign it Exhibit J2.1, and
13
that is the documents book of Enbridge Gas Distribution.
14
EXHIBIT NO. J2.1:
15
DISTRIBUTION
16
MS. NOWINA:
17
MR. CASS:
DOCUMENTS BOOK OF ENBRIDGE GAS
Thank you, Mr. Schuch.
Madam Chair, in preparing my submissions
18
for today, it struck me that there are a number of basic
19
propositions underlying the matters before the Board that
20
are beyond dispute or, at least, in my submission, that
21
should be beyond dispute.
22
I intend to structure my submissions around nine of
23
these basic propositions.
24
that I've heard the submissions of the moving parties, it
25
is not as clear to me that some of these things are beyond
26
dispute, as I had thought when initially preparing my
27
submissions.
28
I must say, though, that now
I will come to those nine basic propositions in a
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moment.
2
the merits, if I could put it that way, of what the moving
3
parties seek to do on a review motion.
4
Before doing that, I feel that I should address
The difficulty with this hearing of the threshold
5
issue, at least from the point of Enbridge Gas
6
Distribution, is that both in their facta and in their oral
7
submissions to this panel the moving parties have spent
8
most of their time and submissions on the merits of the
9
points; in other words, on what they would argue if they
10
11
actually succeeded in obtaining a review of the decision.
It's not my intention to descend into a discussion of
12
what would actually be said if the Board were to allow a
13
review.
14
In preparing Enbridge Gas Distribution's factum, this
15
created a bit of a quandary for us, because we didn't want
16
to leave untouched most of what the moving parties were
17
saying, yet, on the other hand, we did not feel that it was
18
appropriate to descend into the merits and argue this as if
19
the review had been allowed.
20
It dawned on us, though, that, in fact, because what
21
the review parties are raising is largely, if not entirely,
22
points that have been argued before, it's all on the record
23
for this Panel to look at, to the extent that this Panel is
24
concerned about any of these issues on the merits.
25
We addressed that in our factum, Madam Chair, starting
26
at, I think, paragraph 33 of the Enbridge Gas Distribution
27
factum.
28
I won't go through every one of these paragraphs, but
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if you're able to turn up paragraph 33, for example, we
2
have endeavoured to pick out the issues that CCC and VECC
3
are advancing in support of their request for a review, and
4
with specific footnotes to point out precisely where those
5
points were argued before.
6
7
8
9
10
In paragraph 34, we've done the same with IGUA; and it
goes on, in similar manner, to paragraph 37, I believe.
So, again, it's not our intention to repeat these
arguments on the merits.
They've been made.
Over at paragraph 41 of the factum, you will see the
11
company's position being just what I have described to you.
12
The company does not intend to delve into the merits, but
13
given that, as seen in paragraphs 33 to 37, these are all
14
points that one way or another were argued before; they are
15
all points that one way or another were responded to in the
16
arguments of various parties.
17
Now, what we tried to do in Exhibit J2.1, Madam Chair,
18
is assist the Board with this a little bit, again, to the
19
extent that the Board wishes to delve into the merits.
20
So if you were to turn up the table of contents of
21
Exhibit J2.1, you will see that from tabs 9 to 16 we have
22
included these arguments.
23
parties' arguments, we've endeavoured to highlight the
24
footnote references from the factum to where these points
25
were argued before.
26
With respect to the moving
With respect to the responses, those are tabs -- well,
27
actually, it's arguments in-chief; I should be clear.
28
arguments in-chief of Enbridge Gas Distribution, Union Gas,
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1
and Market Hub Partners are at tabs 14 to 16.
2
endeavoured to mark for the Board portions of these
3
arguments that are responsive to the points now being
4
raised by the moving parties.
5
We've
Now, unfortunately our brief does not include the
6
reply arguments; they were done orally.
And there is a
7
transcript of that that the Board can look at, again, to
8
the extent that the Board wishes to delve into the merits
9
of the arguments.
10
For today's purposes, there will be one exception.
11
When I come to the end of my submission, I will briefly
12
touch on one point that's been made with respect to the
13
merits.
14
the merits and to deal with what is really at issue today
15
and what the Board asked about in its Procedural Order,
16
which is the threshold issue.
17
My hope, though, is to minimize arguments about
That then brings me to my nine basic propositions.
18
intend to structure my submissions around these, but
19
perhaps it would be easiest if I said what the nine are
20
first and then proceeded to my submissions.
21
Number one is as follows:
I
Section 29 of the OEB Act,
22
which is the statutory provision under which the Board's
23
forbearance decision was made, provides the Board with a
24
wide discretion to determine the scope of any forbearance
25
order that it might choose to make.
26
Point number two:
In exercising its jurisdiction
27
under section 29 in this case, the Board conducted a wide
28
and far-reaching review of storage regulation and
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2
forbearance.
Point number three:
The Board's decision reached
3
after this wide and far-reaching review was one that
4
addressed a diverse range of issues, positions, and
5
arguments.
6
Point number four:
Insofar as a review of that
7
decision is concerned, the starting point is the Statutory
8
Powers Procedure Act.
9
I recall correctly, which, in my submission, indicates that
And I believe it's section 21.2, if
10
the Board has no review power unless its rules explicitly
11
make provision for such a power.
12
I'll pause for a moment, because the Board will
13
appreciate, as I'm going through some of these points, that
14
they have been addressed, at least in part, by the
15
submissions which precede me.
16
on them, where they have already been addressed by other
17
parties, it will certainly minimize the amount that I need
18
to say now about what I think are these basic propositions.
19
So when I come to elaborate
Point number five is that the Board's rule addressing
20
review motions assists this Panel, and any panel hearing
21
the threshold issue, with the proper scope of a review
22
motion by explicitly setting out four grounds that, at the
23
very least, are indicative, if not more.
24
Point number six is that three of these four grounds
25
in rule 44 that are at least indicative cannot apply in
26
this case, because they relate to facts or circumstances
27
not on the original record for the proceeding; and, given
28
that there is no affidavit evidence presented by any of the
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moving parties to bring forward facts or circumstances not
2
on the original record, these three of the four grounds
3
cannot apply.
4
I think that's entirely consistent with the
5
submissions that preceded me, both by Mr. Leslie and by
6
counsel for Board Staff.
7
The next basic proposition that I would put to the
8
Board has two parts.
The first is this:
Although I don't
9
recall any of the moving parties directly addressing this,
10
it certainly seems to Enbridge Gas Distribution that all
11
parties in this matter have to agree that there must be
12
some measure of finality and predictability associated with
13
Board decisions.
14
Then there is a second part of this seventh
15
proposition that I say flows from what I just said.
16
second part is that whatever the appropriate test for a
17
review motion may be, the standard must be such that it
18
will exclude parties who are simply unhappy with aspects of
19
the Board's decision.
20
would never be any finality to Board decisions.
21
The
I say this because otherwise there
Proposition number eight is, again, one which flows
22
from the previous proposition.
Given that, as I've said,
23
at least in our submission – and, again, we assume it's not
24
disputed - there cannot be a review simply because a party
25
is unhappy with aspects of the Board's decision.
26
lie with a moving party on a review motion to explain how
27
that party's case rises above the position of someone who
28
is simply unhappy with the decision.
It must
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In other words, it can't be for the responding parties
2
to have to make the counterargument.
3
moving parties to explain to the Board - and in this case,
4
this particular Panel - how the points it is making rises
5
above the position of someone who doesn't like the
6
decision.
7
It must be for the
The ninth proposition is that, as the Board's rules
8
now stand, there is no provision for a rehearing of the
9
matter.
10
come to elaborate on the nine propositions.
11
12
This I'll explain in a little more detail as I
Having stated those nine, I will move to the
submissions that I intended to make around them.
13
The first proposition had to do with the power under
14
section 29 and the point that it gives the Board a wide
15
discretion to determine the scope of any forbearance order.
16
Section 29, if the Board needs to turn it up, is at
17
tab 18 of Exhibit J1.7, which is Board Staff's brief with
18
the green cover.
19
tab 18.
20
in.
21
Section 29 is a number of pages in, at
It appears to me that it's approximately ten pages
My point, again, is a simple one here as to the scope
22
of the Board's discretion with respect to a forbearance
23
order.
24
a determination to refrain, in whole or in part.
25
gives the Board considerable scope.
26
The section makes it clear that the Board may make
That
The section makes it clear that the Board can refrain
27
from exercising any power or any duty.
28
and duties.
So it's both powers
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The section also makes it clear that the Board's
2
determination can have to do with a variety of things,
3
including a product, a class of product, a service, or a
4
class of services that meets the competition test in this
5
section.
6
Finally, the last line of section 29 makes it clear
7
that forbearance can occur when competition is or will be
8
sufficient to protect the public interest.
9
Again, the point is that in fashioning a forbearance
10
decision, this section gives the Board a wide discretion as
11
to the scope of the particular forbearance decision.
12
My second proposition was that the Board has
13
conducted, under this section 29, a broad and far-reaching
14
review of storage regulation and forbearance.
15
the Board knows that matters were kicked off, so to speak,
16
with the Natural Gas Forum.
17
many parties, interested entities, and people were given an
18
opportunity to participate and come forward and express
19
their views to the Board.
20
In the course of that process,
The outcome of the Natural Gas Forum led into this
21
proceeding, where the Board had the benefit of
22
representation of many different interests.
23
Of course,
Of course, this included the ratepayer groups like
24
IGUA, CCC, and VECC, that the Board heard from yesterday.
25
It included APPrO, that the Board heard from yesterday.
26
And it included specific generators; namely, Sithe,
27
TransCanada Energy, and Portlands.
28
parties, such as TransCanada Pipelines, Gaz Metro, Market
It included many other
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2
Hub Partners, and BP Canada.
Now, a lot of emphasis has been placed, at least by
3
Mr. Thompson, on BP Canada.
4
BP Canada was not the only participant in this proceeding
5
that held a similar position in the market.
6
Marketing also was a participant in the proceeding.
7
submitted a written argument to the Board.
8
in its written argument its reluctance to submit evidence
9
because of the risk of having to reveal confidential or
10
11
I point out to the Board that
Nexen
Nexen
It pointed out
sensitive information.
I ask the Board, though, to refer to the argument of
12
Nexen Marketing because it's entirely supportive of the
13
types of things that the Board heard from BP and other
14
parties.
15
The point is that this was a wide representation from
16
before the Board in this proceeding that the Board was able
17
to draw on for the purposes of coming to its decision.
18
Mr. Leslie has already spoken about the amount of
19
evidence and some of the types of evidence that the Board
20
heard.
21
of expert evidence.
22
won't dwell on that any further.
I was going to talk to the Board about the extent
Mr. Leslie has already done that, so I
23
In addition to the 14 days of hearing time that
24
Mr. Leslie referred to, the Board's process included
25
numerous days of Technical Conferences.
26
In addition to the expert witnesses that Mr. Leslie
27
referred to, the Board had the benefit of many other
28
witnesses; again, from a wide range of interests.
These
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included a panel from Gaz Metro, it included a panel of six
2
witnesses on behalf of APPrO and the generators, and it
3
included the two witnesses from BP.
4
As counsel for Board Staff has pointed out, the
5
original Panel had the advantage of seeing and hearing all
6
of these many witnesses over the 14 days of hearing.
7
don't suggest for a moment that there's a credibility issue
8
here; that for reasons of credibility make it important for
9
the Panel to see and hear the witnesses.
However, in my
10
submission, there is seldom a credibility issue in
11
proceedings before the Board.
12
However, the process of this Board, again, in my
13
submission, notwithstanding the absence of credibility
14
issues, recognizes the value of the Panel seeing and
15
hearing the witnesses.
16
have to have hearings at all.
17
a paper record.
18
I
If that were the case, we wouldn't
Everything could be done on
Now, at the conclusion of all of this evidence, there
19
was an extensive argument phase.
20
our factum.
21
statutory powers, about the appropriate interpretation of
22
the governing statute, and about all the range of matters
23
that Mr. Leslie referred to a few moments ago, and I won't
24
repeat.
25
We've referred to this in
The Board heard detailed arguments about its
Again, as I've already said, to the extent that the
26
Board desires - this Panel desires - reference back to what
27
was argued before the original Panel, it's referred to in
28
our factum; and at least the arguments in-chief, with
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2
highlighted portions, are at Exhibit J2.1.
My third proposition is that the Board's decision
3
reached after this far-reaching review was one that
4
addressed the diverse range of issues, positions, and
5
arguments.
6
Now, here most of what I had to say was covered by
7
Mr. Leslie, so I will essentially just move on.
I was
8
going to take the Board through the decision and how, in
9
fact, it did consider that diverse range of its issues and
10
positions and arguments; however, I don't want to repeat
11
what Mr. Leslie said.
12
I wasn't sure whether he pointed out, in addition to
13
the other parts of the decision he mentioned, that the
14
decision specifically has a section - it's section 4.2 -
15
addressing protection of the interests of consumers with
16
respect to price and the reliability and quality of gas
17
service.
18
Madam Chair, my fourth proposition is one that I
19
thought would be beyond dispute, but I think I stand
20
corrected on that now that I have heard the submissions of
21
the moving parties.
22
It's my submission that under the Statutory Powers
23
Procedure Act, as I said when I was laying out the nine
24
propositions, the Board has no review power unless its
25
rules explicitly make provision for such a power.
26
Now, counsel for Board Staff has covered this issue in
27
his submissions, so, again, I'm going to not go through all
28
of the things I intended to say, in order to avoid
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2
repetition.
I did hear, though, in the arguments of moving parties
3
a different proposition; that being that the Board cannot
4
by its rules cut down on the broad power of review in the
5
Statutory Powers Procedure Act.
6
Staff has been through this.
7
Again, counsel for Board
The wording of the provision is at tab 15 of Board
8
Staff's brief.
9
more clear; that the power of a tribunal to review under
10
section 21.2 applies if it considers it advisable and if
11
its rules made under section 25.1 deal with the matter.
12
In my submission, the wording could not be
Again, I had thought that this would be a proposition
13
that would be beyond dispute.
14
that what the Board is hearing - namely, that the Board's
15
rules cannot cut down on a broad review power in the
16
statute - is exactly the opposite of what the statute
17
really says.
18
In fact, my submission is
The statute says that there have to be rules for a
19
tribunal to take its review power from section 21.2, in my
20
submission, just the opposite of what was being said by at
21
least certain moving parties.
22
My next proposition, the fifth one, was that the
23
Board's rule addressing review motions assists this Panel,
24
and any panel hearing a threshold issue, by explicitly
25
setting out four grounds for a review motion that, at a
26
minimum, are indicative, if not more.
27
preceded me have already addressed these four grounds.
28
Again, counsel who
Just a couple of points that I wish to make at this
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time.
First, as I said when I was going through what I
2
feel are -- what I am submitting are the basic
3
propositions, is that three of these four grounds all
4
relate to evidence or facts, facts or circumstances, not on
5
the record for the original proceeding.
6
because of change in circumstances, new facts or facts that
7
were not previously placed in evidence that could not have
8
been reasonably discovered.
So that would be
9
Those three grounds are all matters dealing with
10
evidence not on the original -- facts or circumstances not
11
on the original record.
12
In the absence of any affidavit evidence by the moving
13
parties to describe any such facts or circumstances not on
14
the original record, those grounds simply can't apply,
15
leaving, as Mr. Leslie has said, one of the four grounds in
16
rule 44; that being error in fact.
17
The other point that I wanted to make just before
18
leaving this part of my submissions is that whatever might
19
or might not be said about the scope of rule 44, it's
20
certainly clear that the rule is much more focussed now on
21
factual matters than the previous version of the rule, and
22
in that context, in that context of being focussed on
23
factual matters, again, three of the four items have to do
24
with facts or circumstances not found on the original
25
record.
26
I think that the Board can take something from the
27
focus of this rule, as it now stands, in comparison to how
28
the rule used to read.
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Now, I've already moved ahead to my sixth proposition,
2
which was that three of the four grounds in rule 44 cannot
3
apply in this case because of the absence of any affidavit
4
evidence in support of the motions.
5
This, then, in my submission, leaves at the most,
6
putting the moving parties' case, at its highest, two
7
possible options for the moving parties to ground their
8
motion.
9
10
The first is the remaining item referred to in
rule 44, and that's error in fact.
11
However, in my submission - and, again, this has been
12
canvassed by both Mr. Leslie and counsel for Board Staff -
13
an error in fact within the meaning of rule 44 cannot mean
14
simply a factual element of a decision that moving parties
15
disagree with.
16
the threshold, then the threshold is non-existent, because
17
a party requesting a review can always say, There is a
18
factual element of the Board's decision I disagree with, so
19
there is an error in fact.
20
The reason I say that is that if this is
That can't be the threshold.
I say further on that
21
point, if it had been the intention within rule 44 that the
22
threshold would be that thin, that all a moving party had
23
to do was say, There is a factual element of this decision
24
that I disagree with, then surely much more plain words
25
would have been used in rule 44 to express an intention
26
that the threshold be so thin.
27
used are "error in fact".
28
Instead, the words that are
In my submission, again, consistent with what counsel
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for Board Staff has said and what Mr. Leslie has said, the
2
plain meaning of those words is that the moving parties
3
must have a clearly identifiable divergence between a
4
factual element of the Board decision and the evidence that
5
was before the Board.
6
Now, the other option, putting the moving parties'
7
case at its highest, that they would have to demonstrate to
8
this Panel that their motions are within rule 44, lies, in
9
their submission, that rule 44 is not exhaustive.
10
Even if the Board is to take the four grounds set out
11
in rule 44 as being not exhaustive but, in my submission,
12
still being indicative, I submit to the Board that it lies
13
with the moving parties to bring forward a ground for their
14
request for review that, although not explicitly mentioned
15
in rule 44, is sufficiently persuasive to this Board for
16
the Board to accept that it falls within the spirit of the
17
rule.
18
In my submission, the moving parties have not even
19
attempted to do that.
20
four enumerated grounds in rule 44 and told you, We have
21
another ground or grounds that is of a character that the
22
Board can treat it as being, essentially, within the spirit
23
of what is there.
24
They have not attempted to take the
Instead, what the moving parties do, in my submission,
25
is default back to the general wording at the beginning of
26
paragraph (a) of the rule.
27
28
For that purpose, it might be helpful if you had the
wording of the rule in front of you.
For convenience,
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still working with Board Staff's brief Exhibit J1.7, that's
2
at tab 17.
3
If you look at paragraph (a) of rule 44.01, you will
4
see that what a review motion must do is set out the
5
grounds for the motion that raise a question as to the
6
correctness of the order or decision.
7
what the grounds may include.
8
Then it indicates
Even taking the moving parties' position at its
9
highest that this is not an exhaustive list of grounds,
10
they still must have grounds that they can persuade the
11
Board should somehow be added to the list because they're
12
within the spirit of the rule.
13
Instead, in my submission, the moving parties are
14
essentially just telling you that they've raised a question
15
as to the correctness of the order or decision.
16
just defaulted back to the very general words in the rule.
17
In my submission, that is not what the rule contemplated.
18
The rule contemplates to raise a question as to the
19
correctness of the order or decision but to have specific
20
grounds that either are those enumerated or that the
21
parties can persuade the Board should be treated as if they
22
were the ones enumerated.
They've
23
In my submission, to simply default back to the
24
general wording to raise a question as to the correctness
25
of the order or decision means that it was absolutely
26
meaningless for the drafters of the rules to have attempt
27
to lay out what the types of grounds might be.
28
It's of no point to lay out the types of grounds if a
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moving party can default back to the general proposition
2
about raising an issue as to the correctness of the order
3
or decision.
4
This, then, brings me to my proposition number seven,
5
which, in fact, as the Board will remember, had two parts.
6
The first part was that it’s certainly our expectation that
7
all parties must agree that there must be some measure of
8
finality and predictability associated with Board
9
decisions.
10
The second part of that proposition is that if there
11
must be some measure of finality, it can't be the case that
12
the standard will not exclude those who are simply unhappy
13
with aspects of the Board's decision.
14
At this point what I would like to do is to digress
15
for a moment from these propositions and address a
16
submission that was made in argument yesterday by CCC.
17
As the Board is aware, in its materials Enbridge Gas
18
Distribution has put forward arguments about the threshold
19
for a review motion made in previous cases.
20
made by CAC - I emphasize, not CCC - and IGUA.
21
These were as
Yesterday, if I recall correctly, Mr. Warren said with
22
respect to these arguments that Enbridge Gas Distribution
23
had brought forward that the earlier case was different
24
because Enbridge Gas Distribution in the earlier case was
25
relying on new evidence.
26
In fact, there were two earlier cases.
The one that I
27
would like the Board to turn to briefly is the review
28
motion that occurred in the Board's 1791415 proceeding
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2
involving a decision with respect to deferred taxes.
The Board decision on this review motion is at tab 4
3
of the Enbridge brief.
4
of Exhibit J2.1.
5
6
7
That's Exhibit J2.1.
That's tab 4
I just would like to point out to the Board a couple
of aspects of the Board's decision.
At page 3 there is a small paragraph, about a third of
8
the way down, beginning with the words "the applicant."
9
The words are that:
10
"The applicant relied principally on particular
11
subsections of the review rule that existed at that
12
time, arguing that brand new evidence is not required
13
to support a request for rehearing."
14
It's clear, then, that in this case, Enbridge
15
Consumers Gas, as it was at that time, was not relying on
16
new evidence, or at least not exclusively.
17
Then, if you turn over to pages 4 and 5 of the
18
decision, you will see the types of grounds that Enbridge
19
Consumers Gas was relying on.
20
The second paragraph on page 4 makes reference to one
21
ground that had to do with a suggestion that there was a
22
Board error in the decision.
23
Skipping down to the bottom paragraph on page 4, you
24
will see the argument was that a certain issue was a matter
25
of principle raised by the decision.
26
sentence of the last paragraph on page 4.
27
28
That's the second
Then, without going through all of them, each, I
believe, each of the first three paragraphs on page 5 are
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all said to be matters of principle raised by the Board
2
decision.
3
This was not a motion that, in essence, was based on
4
new evidence.
5
the grounds had to do with matters of principle raised by
6
the Board decision.
7
There were a number of grounds.
But most of
The reason for that is because the rule at the time
8
setting out the grounds for a review motion explicitly
9
included matters of principle.
This again can be seen from
10
Board Staff's brief.
11
counsel for Board Staff yesterday, that under the old rule:
12
“The final ground for a review motion was an important
13
matter of principle that has been raised by the order
14
or decision.”
15
That is no longer in the rule.
16
And it was referred to, I think, by
The rule is narrower
than it used to be.
17
At tab 3 of the Enbridge brief, Exhibit J2.1, the
18
Board can see what IGUA and CAC were saying in the context
19
of the rule that existed at that time.
20
If I could take you to tab 3 and ask you first to turn
21
up page 34 of 62.
This is part of the submission made by
22
IGUA, and I will start at line 10.
23
at line 10 says:
The submission starting
24
"It is not really whether the decision raises
25
important questions of principle.
26
my submission, is whether those principles were raised
27
in the proceeding and decided and whether there is
28
anything new that was not considered or available at
The threshold, in
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the time those principles were fully argued.”
2
Even at the time when the rule was broader than it is
3
now, the argument was that the issue was whether there is
4
anything new.
5
6
7
If I could ask you to turn to page 46 of 62 at the
same tab.
This is the argument of CAC.
Looking down around line 11, you will see an argument
8
about the importance of returning to first principles.
9
refers to the requirement for the Board to determine a
10
11
It
threshold issue.
Now, of course, as has already been covered by other
12
counsel, it's no longer a requirement, but it's permissive
13
for the Board to consider the threshold issue.
14
The submission was:
15
"The reason the requirement is there is that the Board
16
cannot and should not rehear or review every decision.
17
There are important considerations of finality to the
18
Board decision.
19
predictability that the parties, and indeed the
20
public, can know that when the Board reaches a
21
decision, except in very unusual circumstances, that
22
decision will stand.
23
public policy."
24
This is in part why, in my submissions as to basic
There are important considerations of
Those are important issues of
25
propositions, that I had thought would be beyond dispute.
26
As I said, it was certainly my expectation that all parties
27
to this proceeding must accept that there is some measure
28
of finality and predictability to be associated with Board
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decisions.
Now, if I could ask the Board to turn to page 49 of 62
3
of these same arguments.
I'll quickly refer to line 18.
4
Counsel for CAC was making a submission about context, and
5
then said:
6
"Set against that context is my friend Mr. Cass's
7
argument that with respect to the criteria which are
8
listed in section 33 of your rules, this is not an
9
exhaustive list."
10
That probably sounds familiar to the Panel:
11
"In my respectful submission, that list, which is a
12
helpful guideline to the parties coming before the
13
Board, doesn't and shouldn't change the longstanding
14
view that the review power should be considered
15
restrictively in requiring something new."
16
So IGUA said it in its case and CAC said it in its
17
case.
18
matters of principle, the position was that something new
19
is required.
20
Notwithstanding the broader rule allowing review on
Just one final excerpt from this transcript, a short
21
one at page 54.
It's at line 21.
I just have to read it
22
because of the rare occasion of a compliment like this.
23
But at line 21, counsel for CAC said:
24
"Like any skilled counsel, Mr. Cass has found reasons
25
why he doesn't agree and he wants to elevate those
26
reasons into important matters of principle."
27
Now, Madam Chair, what I would say about that passage
28
is that it applies precisely, and even more so with respect
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to the skill, I might say, to the moving parties in this
2
case.
3
case are doing.
4
Madam Chair, is that the rule is now narrower than it was
5
at that time.
6
This is precisely what the moving parties in this
The only difference, in my submission,
The rule does not even contain the wording about
7
matters of principle that was in the rule under
8
consideration in this case.
9
My eighth proposition was one flowing from the
10
previous one; namely, that given that there cannot be a
11
review simply because a party is unhappy with aspects of
12
the Board's decision, it must lie with the moving party on
13
a review motion to explain how that party's case rises
14
above the position of someone who is simply unhappy with
15
the decision.
16
Well, speaking for myself, Madam Chair, I've read the
17
facta of the moving parties; I've listened to the oral
18
submissions.
19
of it, has to do with the merits of the Board's decision
20
and, really, constitutes arguments about why the moving
21
parties did not like the decision.
22
As I've already said, much of it, if not most
Little or no effort has been made by these parties to
23
elevate their positions beyond that of someone who simply
24
disagrees with or doesn't like the decision.
25
Now, my last proposition was that there is -- as the
26
Board's rules now stand, there is no provision for a
27
rehearing of the case.
28
the old review rule and the new review rule.
That arises from a comparison of
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Again, Board counsel, Board Staff, included these
2
items in their brief, Exhibit J1.7.
The previous version
3
of the rule is at tab 16 of Exhibit J1.7.
4
What the Board can see from this previous version of
5
the rule is repeated references to "review” or “rehear" a
6
matter, starting even at the first part of the rule, 62.01.
7
At the left-hand side of the second line, the Board will
8
see those words, "review” or “rehear."
9
The words are repeated in that fashion throughout this
10
version of the rule.
11
to "review” or “rehear", and it goes on.
12
That can be compared with the current version of the
13
rule.
14
Exhibit J1.7.
15
62.03 refers to the Board's intention
Again, it's at tab 17 of the Board Staff brief,
I believe that all those references to "rehear" or
16
"rehearing" have been removed.
17
"review".
18
The only reference is to
I should say the only reference is to "review".
For
19
example, in rule 42.01, and then there is a description of
20
what the Board might do following a review, which is to
21
"vary, suspend or cancel the order or decision."
22
So this brings me to a submission about the options
23
that are before us at this time.
In my submission, a full
24
rehearing simply is not an option under the review rule as
25
it now stands.
26
the decision in its entirety - that is, a review, not a
27
rehearing - or a review of only those matters that this
28
Panel is satisfied should cross the threshold.
Essentially, the options are a review of
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There is a difficulty, though, that Enbridge Gas
2
Distribution sees with that in the context of this case,
3
and, again, it has to do with the nature of the case that
4
the moving parties have brought forward.
5
The difficulty arises when parties come forward not
6
with new evidence or a specifically identifiable error in
7
fact, but with their laundry list of disagreements with the
8
Board decision.
9
If there was a specifically identifiable error in
10
fact, or a new fact, the process would be a clear one for
11
this Panel.
12
factual correction or the new fact might affect the
13
original decision.
14
The Board would have to determine how the
It's an entirely different matter, though, when the
15
moving parties come forward seeking to re-argue, as I said,
16
a laundry list of aspects of the decision.
17
is that the review arising from this potentially becomes a
18
one-sided reassessment of only those points that certain
19
parties disagree with, while apparently leaving untouched
20
the parts of the decision that they happen to like.
21
The difficulty
And in this context, I point out to the Board, this
22
Panel, that the previous panel made a number of
23
determinations that went against the position of Enbridge
24
Gas Distribution.
25
give just some examples.
26
I have quite a list of them, but I'll
In the decision at page 42, Enbridge Gas Distribution
27
had advanced the position that, under section 29, all the
28
Board needed to do was determine that there was competition
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sufficient to protect the public interest and no further
2
public interest analysis was needed, because it was the
3
competition itself that protects the public interest.
4
The Board rejected that.
5
At page 44 of the decision, Enbridge Gas Distribution
6
made a submission, based on the word "shall" in section 29,
7
that forbearance is mandatory when a finding is made that
8
the competitive test has been satisfied.
9
The Board rejected that submission.
10
At pages 100 to 101, Enbridge Gas Distribution's
11
position that sharing of margin from short-term storage
12
services should be discontinued was considered by the
13
Board.
14
The Board rejected that position and decided that
15
sharing of short-term services, margin from short-term
16
services, should continue.
17
In fact, the Board went further.
At pages 102 to 103,
18
the Board actually reduced Enbridge Gas Distribution's
19
shareholder incentive relating to the sharing of margin
20
from short-term services from a 25 percent incentive to a
21
10 percent incentive.
22
So there are aspects of this decision that the moving
23
parties apparently don't have difficulty with, because they
24
went in favour of the moving parties.
25
submission, is the problem or one of the problems presented
26
when the Board is asked simply just to consider a list of
27
disagreements with the Board decision.
28
This, in my
That would be, in my submission, a one-sided
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reassessment that, in my submission, could only make the
2
decision worse, if it's just going to look at one side of
3
complaints about the decision.
4
This, again, is why I say that the Board should come
5
back to what the real tests are as set out in rule 44.
6
there was a specifically identifiable error in fact, this
7
would not be a problem.
8
bring forward their laundry list of disagreements with the
9
decision and ask this Panel to do something about that.
10
If
It becomes a problem when parties
Now, I said I was just going to have one exception to
11
my statement that I would not get into the merits.
12
has to do with the position taken by APPrO in its motion to
13
the Board.
14
can.
15
This
I will just touch on this very quickly, if I
APPrO, as I heard their counsel yesterday, complains
16
that the original Board Panel delinked the issue of storage
17
deliverability from the issue of underlying storage space
18
for generators.
19
The first point on this for the Panel to understand,
20
in my submission, Madam Chair, is that any such delinking,
21
to the extent that it did occur, was part of the settlement
22
agreed to by APPrO and the generators with Enbridge Gas
23
Distribution.
24
Part of that settlement proposal is in the APPrO
25
brief, Exhibit J1.5, at tab 7.
26
readily available.
27
28
I don't know whether that's
It's Exhibit J1.5, tab 7.
At the bottom of the first page at that tab, the Board
will see a paragraph (a), and it states:
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"The storage space requirement to meet gas-fired
2
generators' intra-day balancing needs is based on the
3
assumption that high-deliverability storage is
4
available to those customers in the market.
5
of this settlement proposal was that the high-
6
deliverability service that the generators said they
7
need for intra-day balancing needs was available to
8
them in the market.”
9
Now, there is much more that's said about this in the
The basis
10
settlement proposal, Madam Chair.
11
before the original panel, Enbridge Gas Distribution
12
carefully went through the settlement proposal to describe
13
how it was very consistent and very clear in establishing
14
the principle that appears from that paragraph (a).
15
This argument is in our brief at tab 14, pages 22-24
16
of 35.
17
wishes.
18
In argument in-chief
This Panel can see the argument again, if it
Having made that argument, Enbridge Gas Distribution
19
was accused of parsing the settlement proposal, and so I
20
don't propose to do it again.
21
The point of the argument was simply that this
22
delinking of deliverability and the storage space that
23
Mr. Moran complains about was part of the settlement
24
proposal, and there are a number of provisions of that
25
document that are completely consistent with that
26
conclusion.
27
28
Now, the other aspect of this that I wanted to touch
on is actually the Board decision.
Mr. Leslie has referred
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to a number of parts of the Board decision that I intended
2
to.
3
I won't repeat any of that.
There is one paragraph that's particularly relevant to
4
Enbridge Gas Distribution that was not referred to.
5
at page 68 of the decision.
That's
I'm sorry, I meant page 70.
6
There is discussion of Enbridge's position at page 68,
7
but the actual Board finding that I meant to refer to is at
8
page 70.
9
10
The first full paragraph on page 70, at the second
sentence, the Board says:
11
"In this context, we find that the crucial factor is
12
the availability of the service itself; namely, its
13
reliability and quality.
14
Enbridge committed to offer Rate 316 ...”
15
That was Enbridge's high-deliverability storage
16
The Board notes that
offering.
17
“... whether or not the Tecumseh enhancement project
18
goes ahead, and to price it on a cost pass-through
19
basis.
20
commitment."
21
As far as Enbridge Gas Distribution was concerned,
The Board expects Enbridge to fulfill this
22
there was no gap in the Board decision, as Mr. Moran said.
23
Enbridge had made a commitment that it would offer this
24
high-deliverability service on a cost pass-through basis,
25
and the Board indicated its expectation that Enbridge would
26
fulfill that commitment.
27
28
Later, on page 70, last full paragraph, the Board
says:
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"It will refrain from regulating the rates for new
2
storage services, including Enbridge's high-
3
deliverability service from the Tecumseh storage and
4
enhancement project, Rate 316."
5
Rate 316, again, was the proposal to offer this
6
service on a cost, pass-through basis.
7
from regulating that.
8
9
The Board refrained
That's why, as Mr. Leslie has said, in the order
issued by the Board, you don't see the reference to this
10
Rate 316 high-deliverability service, because it was part
11
of the Board's forbearance.
12
of which one could expect to see an order of the Board when
13
the Board has decided to forbear.
14
It's not something in respect
But Enbridge has made the commitment about the cost
15
pass-through.
Again, this was discussed in great detail in
16
the original proceeding.
17
For this Panel's reference, that commitment is
18
described in argument in-chief, which is in the Enbridge
19
brief, tab 14, and the Panel can refer, for example, to
20
page 31 of 35, or page 33 of 35 for the Enbridge
21
commitment.
22
Miraculously, Madam Chair, I've come in, somehow, I
23
think, just under the one hour.
24
submissions.
25
MS. NOWINA:
26
[Board confers]
27
MS. NOWINA:
28
That completes my
Thank you, Mr. Cass.
Just a moment, Mr. Cass.
Let me see if I
had any questions.
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No, I think not.
Thank you, Mr. Cass.
2
Before we break - and we will break now - I'd like to
3
get an estimate of the times that the moving parties plan
4
to take in reply.
5
estimate, that I expect that to be a very short period of
6
time.
I'll let you take that as guidance.
7
Mr. Warren.
8
MR. WARREN:
9
Let me say, before you give me an
I expect, Madam Chair, to be no more than
half an hour at the most.
I will ask for a brief break
10
because we've been trying to assemble some materials that
11
are responsive to the issues that have been raised.
12
may take me perhaps 15 minutes to do that, but no more.
13
But I don't expect to be more than half an hour at the
14
absolute outside.
15
MS. NOWINA:
16
Mr. Janigan?
17
MR. JANIGAN:
So it
Right.
I plan to attempt to have Mr. Warren
18
incorporate my submissions in the context of his
19
submissions.
20
estimate.
It might add, potentially, ten minutes to his
It may not.
21
MS. NOWINA:
22
Mr. Moran.
23
MR. MORAN:
Thank you.
Yes, Madam Chair.
We haven't heard from
24
Mr. Smith, but I'm not sure that he's taking issue
25
specifically with anything that APPrO's raising.
26
that basis, I think that I can bring my reply in under half
27
an hour.
28
MS. NOWINA:
So on
Thank you.
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Mr. Thompson.
2
MR. THOMPSON:
3
MS. NOWINA:
4
Mr. Ryder.
5
MR. RYDER:
6
MS. NOWINA:
7
I consider half an hour to not be a short period of
About a half an hour, plus or minus 10.
Half an hour, Mr. Thompson.
About ten minutes.
Thank you, Mr. Ryder.
8
time.
I consider it to be fairly lengthy.
So with the
9
exception of Mr. Warren, who will incorporate
10
Mr. Janigan's, if everyone else can strictly keep it within
11
that half an hour, I'd appreciate it.
12
Just a moment, please.
13
[Board confers]
14
MS. NOWINA:
Yes.
Ms. Spoel reminded me - and I'm
15
sure you're aware of this - your right to reply is based on
16
your responding to new issues that you have heard from the
17
responding parties.
18
that.
19
Thank you.
And I'm assuming you will keep it to
We will break now.
20
will hear from Mr. Smith.
21
and hear reply.
After the break, we
Then we will have a lunch break
22
We'll return at five minutes past 11:00.
23
--- Recess taken at 10:46 a.m.
24
--- On resuming at 11:11 p.m.
25
MS. NOWINA:
26
SUBMISSIONS BY MR. SMITH:
27
MR. SMITH:
28
Please be seated.
Mr. Smith.
Madam Chair, members, I will be referring
to Exhibit C5, which is the Market Hub Partners Canada
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factum, and I'd be obliged for an exhibit number for the
2
book of authorities, to which I would also refer.
3
MR. SCHUCH:
Madam Chair, we can assign Exhibit No.
4
J2.2 to the book of authorities of Market Hub Partners
5
Canada Limited.
6
EXHIBIT NO. J2.2:
7
PARTNERS CANADA LIMITED
8
MR. SMITH:
9
BOOK OF AUTHORITIES OF MARKET HUB
Thank you.
And beyond that, I think my
sole reference will be to the decision itself.
10
Madam Chair, members, for justice to be done and to be
11
seen to be done, it need not be done at least twice or even
12
three times, if someone should have a mind to review your
13
review decision.
14
unable to discharge its public policy obligations if
15
successive decisions are reviewed, the reviews taken up,
16
panels sequestered from each other, and components of the
17
Board Staff similarly divided to avoid tainting, the
18
unhappy effect of chilling allegations of bias and bad
19
faith.
20
This Board will quickly gridlock, be
In our respectful submission, that fact amply supports
21
the submissions on the nature and scope of the Board's
22
review powers made so ably by counsel for Board Staff
23
yesterday, and we expressly support them.
24
That fact also supports why, in the exercise of your
25
discretion as a review panel, you should, in our respectful
26
submission, only grant review for the clearest, most
27
compelling or egregious errors which, by necessity, would
28
mean that the conclusion reached by the hearing panel who
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heard the evidence, looked into the whites of their eyes,
2
was incorrect.
3
It should be a tough standard to satisfy, or else you
4
will forever be consigned to dealing with re-argument of
5
contentious issues that your colleagues have just dealt
6
with.
7
What is of most direct interest to MHP at this point
8
is finality in this administrative decision-making process.
9
MHP Canada has been seeking certainty about the economic
10
parameters of its proposed storage development program for
11
some time, and that program includes both the St. Clair
12
pool and the Sarnia pool developments.
13
MHP Canada first filed the St. Clair application in
14
June of 2005, but then was bumped into the NGEIR proceeding
15
for resolution of the market-based pricing and forbearance
16
issues.
17
You may or may not be aware, Madam Chair, that in that
18
initial filing, Market Hub Partners had to tender market
19
power evidence to justify a request for market-based rates,
20
in light of its affiliate status with Union Gas.
21
Now, the expedited core points decision was requested
22
and granted expressly for the purpose of permitting
23
St. Clair to meet a planned June 2007 in-service date.
24
Now, the sound policy reason for recognizing finality
25
in administrative proceedings was discussed yesterday and
26
again this morning, and reference to the Chandler case was
27
made, specifically page 596.
28
factum, tab 4, which you don't need turn up.
That appears in the Union
We would
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2
simply commend that to your review.
But for MHP Canada, finality is not a theoretical or
3
an academic concern.
For MHP Canada, it's a matter of
4
urgent and pressing necessity.
5
Board's core points approval, followed by its forbearance
6
approval, followed by its approval of the St. Clair pool
7
developments, substantial sums have been committed to
8
ensure that June 2007 in-service date.
9
stage, with wells being drilled as we speak, with site
In reliance upon the
But at this late
10
preparation well underway, all as detailed in paragraph 10
11
of our factum, the entire economic premise of that
12
development is thrown up in the air by the motions for
13
review filed by IGUA and VECC and CCC.
14
MHP Canada, for the record, surmises that neither the
15
APPrO motion nor the Kitchener motion touch upon the
16
Board's conclusions reached in chapter 5.1 of the NGEIR
17
decision as it relates to third-party storage.
18
will make no submissions with respect to those motions.
19
Now, it's becoming pretty difficult to develop
Hence, we
20
incremental third-party storage in the Province of Ontario
21
in an orderly and rational way when the basic rules are
22
thrown into doubt by reviews which do little more than re-
23
argue arguments we have all heard before.
24
heard; you may not have.
25
We have all
The only exception to those arguments is the
26
regrettable argument about bias or bad faith, where IGUA
27
impugns the entire NGEIR storage-related process, arguing
28
at paragraph 59 of its factum:
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"All of these actions, separately and in combination,
2
indicate that the Board abandoned the retention of the
3
status quo as a decision-making option early in the
4
process ..."
5
Early in the process.
6
"... and that it was searching for a forbearance
7
solution to the storage regulations it had listed for
8
determination."
9
I'll come back to that proposition, Madam Chair,
10
throughout my submissions, but I would just ask you to
11
pause for a moment and consider:
12
for that matter, any other third-party storage developer to
13
conclude an open season and enter into contracts with the
14
market at large when the economic certainty afforded by
15
forbearance is under review?
16
How is MHP Canada, or,
Incremental third-party storage is a good thing in the
17
Ontario public interest, as the Board itself observed and
18
we addressed briefly in paragraph 32 of the factum.
19
Now, again, you can review this in greater depth at
20
your leisure, but in paragraphs 4 to 11 we had noted where
21
the core points approval had been rescinded in favour of
22
forbearance.
23
appears to be suggested by IGUA and others to form part of
24
what they refer to as the status quo.
While core points was a workable solution, it
25
However, as detailed in paragraph 7 of our factum,
26
IGUA appears to believe that the value of service range
27
rate regulatory regime -- that would be -- or that would
28
include the core points -- is, in effect, a cost-based form
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of regulation designed to regulate a third-party storage
2
developer's returns.
3
And we refer to an IGUA letter of November the 6th,
4
2006, which appears in tab 1 of the authorities.
5
response to it by MHP is contained in tab 14 at page 3,
6
(iii), and we commend that again to your closer review
7
later.
8
9
The
Now, this argument was never made in the context of
the core points in the NGEIR proceeding or, for that
10
matter, in the Tribute and Tipperary proceedings, as best
11
we could determine.
12
Now, what's significant about that?
What's
13
significant about that is that it belies IGUA's assertion
14
that the status quo would work just fine.
15
IGUA, a range rate of service regulatory regime for
16
third-party storage developers does not work fine.
17
Ironically, this aspect of the status quo wouldn't have a
18
chance, to use someone else's phrase, if IGUA had its way.
19
Clearly, to
But the status quo argument, as it is raised by IGUA
20
and VECC and CCC, is not just wrong.
21
misleading.
It is, with respect,
22
First, any fair-minded review of the record makes
23
clear at that the existing state of affairs was extensively
24
considered by the panel.
25
important.
26
therefrom were determined.
27
28
It was weighed.
That's very
It was weighed. And any related issues arising
MHP Canada, for example, was compared to the existing
circumstances of Tribute and Tipperary, and they were
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accorded comparable relief in the form of the core points.
2
In other words, in that respect, the status quo was not
3
ignored.
4
Ontario, both utility and third party, was carefully
5
chronicled, as the decision makes clear.
6
The existing state of the storage market in
What is -– and, again, I say this with respect –- what
7
is misleading, however, is the implication that the status
8
quo - that is, the exercise of all the Board's powers
9
exactly as before - was permissible once the stipulated
10
11
conditions in section 29 were found to exist.
Think about that.
Section 29, factual finding,
12
determines if there's workable competition in a storage
13
Market -- what does it say?
14
refrain" in whole or in part but "shall refrain" from
15
exercising its powers and duties.
16
It says that the Board "shall
Pages 6 to 10 of our factum, paragraphs 24-38, recite
17
the fact that section 29 manifests the Legislature's belief
18
that in the appropriate circumstances competition is the
19
preferred public policy tool, not regulation, exactly as
20
before.
21
The Legislature made that choice as part of its
22
competitive energy initiative, described - again ably - by
23
counsel for Board Staff yesterday.
24
the Legislature, not the Board.
25
That was a choice of
As we highlighted in paragraph 7 of our factum, the
26
Board simply made a finding of fact about a workably
27
competitive storage services market.
28
that is, the status quo aspect - is mandatory.
The consequence The power
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is a unique negative one, mandatory, with discretion only
2
as to "in whole or in part."
3
Note - and I'm not sure you need to turn this up at
4
this point - but tab 8 of our authorities has the section,
5
the words "refrain from exercising any power or performing
6
any duty."
7
Now, that statutory imperative operates on services or
8
classes of service, like storage.
9
counsel for VECC emphasized repeatedly yesterday.
10
11
doesn't operate on assets.
Not on assets, as
It operates on services.
It also, in section 29.2, operates in respect of any
12
person.
13
Union or like Enbridge Gas Distribution.
14
persons like Tribute or MHP Canada.
15
It
Any person.
Not just existing utilities like
It operates on
So status quo utility regulation, with respect, is
16
irrelevant to these forbearance determinations relating to
17
MHP Canada or Tribute.
18
The Board's powers to conduct a review - that is, the
19
factual finding - were detailed in paragraphs 34 and 35 of
20
the factum.
21
and we won't repeat that.
22
23
24
Again, they were covered extensively earlier,
There are a couple of factual issues, though, that we
would like to highlight.
The first is paragraph 27.
There is a correction I
25
would like to make.
26
the initial EEA study filed October 28th, 2004.
27
28
In paragraph 27, we make reference to
This is a small point, Madam Chair.
We say that it
specifically referenced the provisions of section 29 of the
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Act.
2
to make the point that the study itself was a result of a
3
discussion of section 29 of the Act in the context of the
4
Natural Gas Forum, and it resulted therefrom, or at least
5
in the context of that discussion at the gas forum.
6
In fact, that's incorrect.
What we had intended was
But as a technical matter, there is no reference to
7
section 29 in the initial study itself.
8
great deal turns on it, but best to make it correct.
9
I don't think a
The upshot of the factual inquiry in respect of an
10
issue in the multi-stakeholder Natural Gas Forum had
11
clearly put the future regulation of storage at issue, as a
12
public policy matter.
13
To claim, as IGUA does, that the Board acted in bad
14
faith from the outset, "early in the process", and that the
15
Board was - and these are their words – “searching for a
16
forbearance solution” just because it conducted the factual
17
inquiry contemplated by section 29, is unsupportable.
18
The Board only completed a factual inquiry, but the
19
consequence of that factual finding, which was full or
20
partial forbearance, was one mandated by the Legislature.
21
In other words, it was the Legislature's solution, not the
22
Board's.
23
Now, in sum, we would say that the status quo or
24
searching for a forbearance solution ground for review,
25
therefore, does not pass the threshold for a compelling,
26
extricable error of any kind, in fact or law.
27
28
Moreover, in our respectful submission, IGUA fails to
overcome the presumption that Ms. Chaplin and
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2
Messrs. Rupert and Kaiser acted fairly and impartially.
That presumption exists.
It is detailed under tab 2
3
of our authorities, the excerpt from Blake Administrative
4
Law in Canada at page 114.
5
MS. NOWINA:
Mr. Smith, can I interrupt you there?
6
don't appear to have your book of authorities.
7
Ms. Spoel doesn't appear ...
8
MR. SMITH:
9
MS. NOWINA:
And
I think there are about 27 copies left.
Maybe we could have some, then.
10
Sorry for the interruption.
11
MR. SMITH:
I'm content to simply make reference to
12
tab 2.
13
excerpt you can read for yourselves.
14
I
It is page 114 of the authorities.
It's a brief
It establishes the presumption, which is hardly
15
surprising, that regulators act in good faith and that
16
there's a very heavy onus on any party suggesting bias or
17
bad faith.
18
The other compelling error urged upon you yesterday by
19
counsel for IGUA related to the proper appreciation of the
20
merger enforcement guidelines, and the related FERC market
21
power assessment rules.
22
at some length this morning.
23
Counsel for Union addressed that
Yesterday, I believe counsel for IGUA stuck the words
24
"common sense" in, in support of his assertion that the
25
Board erred.
26
Now, Madam Chair, members, you should derive no more
27
comfort from that proposition than the unsuspecting patient
28
awaiting open-heart surgery would confronted by a lawyer
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2
equipped only with common sense.
In this case, the hearing panel weighed the evidence
3
of several experts, Schwindt, Reed, Sloan, and Henning from
4
EEA, Smead from Navigant, McConihe, all of them had
5
professionals training and experience and they supported
6
the outcome.
7
adopted by the Board in its decision.
In fact, they made recommendations which were
8
Now, with respect to my friend, counsel for Enbridge
9
Gas Distribution, I must respectfully disagree that there
10
were, in fact, credibility or weight considerations that
11
played in the NGEIR proceeding.
12
We have detailed those in paragraph 42 of the factum
13
and supported that with tab 13, which was a copy of the
14
argument of Market Hub Partners, at page 15 and footnote
15
51, which details the evidentiary transcript references and
16
such, where there was a position advanced that the witness,
17
Mr. Stauft, though accepted as an expert, lacked any formal
18
antitrust training and had never conducted an HHI analysis
19
of any market, much less a storage market.
20
And the point to this simply is that there was
21
obviously weight, persuasive weight, accorded the position
22
of certain experts, and that was counter-posed against the
23
weight accorded expert opinion evidence of other witnesses.
24
Now, in those circumstances, the first thing I'd like
25
to say is that there's hardly a compelling or extricable
26
error of anything, much less proof of bad faith or bias,
27
that the panel, the hearing panel, would accord persuasive
28
weight to the evidence of all the other experts arrayed
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against Mr. Stauft.
The second thing I would say vis-a-vis the exercise of
3
this Panel, the review panel's, discretion is that
4
interference with any finding of the hearing panel based on
5
credibility or the weight to be accorded that expert
6
opinion evidence should be avoided, all the more so where
7
bad faith or bias is alleged.
8
9
Now, similarly, the BP witness situation, which has
already received a fair bit of discussion, is not a
10
compelling error which casts in substantial doubt the
11
correctness of the factual finding that the Ontario storage
12
market is workably competitive.
13
that's germane here.
14
That's the conclusion
Yesterday, counsel for IGUA highlighted page 33 of the
15
decision, and I just wanted to pause to look at page 33 of
16
the decision, Madam Chair, and I'll just put it on the
17
record:
18
"For these reasons, while the product market is
19
broader than just physical storage, for purposes of
20
the quantitative analysis, we include physical storage
21
only."
22
So he said, The product market is broader than just
23
physical storage, but for quantitative analysis we include
24
physical storage only.
25
Continuing:
26
"The Board notes that this approach has the benefit of
27
providing a conservative assessment of the level of
28
competition, which is undoubtedly higher than that
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shown by a quantitative analysis based on upon
2
physical storage.
3
basis of the quantitative analysis, found that the
4
market for physical storage services in Ontario was
5
workably competitive."
6
In the result, the Board, on the
"In that respect, the secondary market and the
7
operation of synthetic, non-storage ..."
8
That's not physical storage:
9
"... products or substitutes was not necessary to
10
prove the workably competitive nature of the storage
11
service market."
12
And if you review the balance of the Board's findings
13
in that context, you will see that that is actually
14
discussed at some length.
15
Now, as noted in paragraphs 36 and 37 of our factum,
16
even without the BP witnesses, there was more than enough
17
evidence to support the key conclusion, which underpinned
18
the Board's section 29 determination, to refrain from
19
exercising its regulatory powers in respect of third-party
20
storage development as described in section 5.1 of the
21
decision.
22
And in that regard, we would make further reference to
23
pages 36 and 37 of the decision.
And if you just flip over
24
to them, it's a bit of a graphic demonstration more than
25
something I would ask you to linger through at this point,
26
but pages 36 and 37, you'll see eight bullets listing the
27
evidence in support of the competitiveness of the market,
28
and I'd note that only two of those bullets refer to the BP
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2
3
4
evidence.
There is ample evidence independent of BP to support
what the Board concluded.
Now, in making these submissions, we do not in any way
5
suggest that the Board acted inappropriately in bringing
6
forth the horse's mouth evidence, as the Chairman had
7
referred to it.
8
the BP evidence being discussed to the extent it had by
9
Ms. McConihe and others, that having the best evidence on
It is perfectly understandable that with
10
which to make these factual findings and providing all
11
interested parties an opportunity to cross-examine them, as
12
they did in an open forum, that the Board had well and
13
truly discharged its public interest responsibilities.
14
Now, once again, the Board's course of conduct in
15
completing the record in this factual determination
16
concerning the competitiveness of the Ontario storage
17
services market was well supported by the statutory powers,
18
and was warranted, certainly, given the concern which had
19
been focussed upon this issue in the multi-stakeholder
20
Natural Gas Forum deliberations.
21
Under no circumstances - we say this again - does the
22
course of conduct demonstrate bias or bad faith.
23
say, even if the BP evidence were to be disregarded,
24
there's more than enough evidence to support the factual
25
finding the Board arrived at.
26
And, as I
In sum, in this respect, there are no errors of a
27
compelling nature.
We could say egregious.
28
palpable and overriding.
We could say
There are none of those kinds of
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1
errors which cast in substantial doubt the required factual
2
finding.
3
With respect, IGUA, VECC, and CCC have failed to
4
satisfy the threshold test.
5
third-party storage developer, deserves finality about the
6
basic economic parameters upon which its storage
7
developments were premised.
8
refrain from regulating third-party storage development in
9
Ontario should, in our respectful submission, be upheld.
10
Neither APPrO nor Kitchener nor VECC, CCA, (sic) or
11
IGUA have directly challenged this aspect of the ruling,
12
despite MHP Canada's entreaties for them to clarify their
13
positions.
14
15
16
MHP Canada, and indeed any
The Board's decision to
With respect, we consider it to be improper to wait
now until reply to do so, should they be so disposed.
In closing, a final caution about the US authorities
17
relied upon by counsel for VECC.
18
reveal that none of those authorities involves a
19
forbearance provision.
20
A careful review would
Now, recall my earlier characterization that it's a
21
unique negative power or directive which says that if you
22
find as a fact that something exists, workable competition,
23
you must immediately refrain from exercising powers found
24
elsewhere in your statute in respect of certain services.
25
26
27
28
None of those cases deal with a provision of that
kind.
They are therefore distinguishable.
Now, with respect to Connecticut, I would simply make
the point that the legislative scheme in Connecticut is
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quite different than it is in here - or in Alberta, for
2
that matter - as Mr. Justice Bastarache noted in
3
paragraph 80 of the Atco decision, with which I am sure
4
you're aware, Madam Chair, members.
5
Those are my submissions.
6
MS. NOWINA:
7
That will complete this morning's session.
8
9
Thank you, Mr. Smith.
We'll
break for lunch and resume at 1 o'clock.
MR. SMITH:
Thank you.
10
--- Luncheon recess taken at 11:40 a.m.
11
--- On resuming at 1:05 p.m.
12
MS. NOWINA:
13
Are there any preliminary matters?
14
PRELIMINARY MATTERS:
15
MR. AKMAN:
Please be seated.
Yes, Madam Chair.
Madam Chair, I've
16
spoken to my friends and I hope you will permit me.
17
have handed a copy of a decision of this Board to some of
18
our friends.
19
lunch break, and unfortunately the photocopier is
20
apparently jammed, and so we are endeavouring to get the
21
Panel, who are the most important people to have copies of
22
this decision, copies.
23
We
This case only came to our attention over the
We'll do so as quickly as possible.
What this case is, as I said, it only came to our
24
attention over the lunch break, and we felt that it was
25
important to bring it to the Panel's attention in light of
26
Mr. Kent Thomson's submissions yesterday concerning the
27
existence or not, to his knowledge, of any prior Board
28
decisions on review dealing with matters of natural justice
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2
or procedural fairness.
One of my friends has a copy that I can pass up to, at
3
least, to the Chair.
4
MS. NOWINA:
5
decision, Mr. Akman?
6
MR. AKMAN:
What are you planning to do with this
Madam Chair, with your permission, I would
7
like to briefly describe the decision to the Panel and give
8
you a very brief overview of what the decision involved and
9
what it entailed and our view of the significance of the
10
11
decision.
I imagine that my friends in their reply submissions,
12
in addition to addressing the other submissions that
13
Mr. Kent Thomson made yesterday, would also be in a
14
position to respond to whatever I may have to say about
15
this decision.
16
I'm in the Panel's hands, of course.
If the Panel
17
doesn't want to hear from me, then I'm happy not to make
18
any submissions.
19
MS. NOWINA:
Before you proceed, let me ask the other
20
parties if they have any concerns about this.
21
Hearing none, why don't you proceed.
22
23
24
if the Panel had copies.
MS. ALDRED:
MS. NOWINA:
26
MR. AKMAN:
28
Yes, I'm just going to leave the room and
see if I can speed things up.
25
27
It would be nice
Thank you, Ms. Aldred.
What I will do, Madam Chair, is I will
give page references, and I have noted that the tribunal -MS. NOWINA:
It looks like we have them.
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[Off-the-record discussion]
2
MS. NOWINA:
3
MR. AKMAN:
4
All right, Mr. Akman.
Madam Chair, I wonder if the decision
should be assigned an exhibit number.
5
MS. NOWINA:
Thank you, Mr. Schuch.
6
MR. SCHUCH:
It would be Exhibit J2.3.
7
Good point.
I don't have a
copy, so I'm not sure what to call it.
8
MS. NOWINA:
Can we get Mr. Schuch a copy?
9
MR. SCHUCH:
I wonder if someone can help me.
10
MR. AKMAN:
11
MS. ALDRED:
12
13
We might have to wait.
We're making our copies right now,
Madam Chair.
MS. NOWINA:
We will call it, Mr. Schuch, the Ontario
14
Energy Board Decision of EB-2005-0292, Motions Day, before
15
Mr. Kaiser.
16
It's J2.3?
17
MR. SCHUCH:
J2.3.
18
MS. NOWINA:
Thank you.
19
EXHIBIT NO. J2.3:
20
EB-2005-0292, MOTIONS DAY, BEFORE MR. KAISER
21
MS. NOWINA:
22
SUBMISSIONS BY MR. AKMAN:
23
MR. AKMAN:
24
As I noted at the outset, the context for my reference
ONTARIO ENERGY BOARD DECISION OF
Mr. Akman, You can go ahead.
Thank you, Madam Chair.
25
to this case, our reference to this case this afternoon is
26
to clarify that Mr. Kent Thomson yesterday in his
27
submissions stated that, to our knowledge, there were no
28
review decisions where matters of procedural fairness or
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natural justice had been dealt with by the Board under its
2
review power.
3
As I indicated at the outset of my comments, it came
4
to our attention over the lunch hour that there was this
5
one decision.
6
duty and obligation, to bring this forward to the Board so
7
that it would have this decision in considering the
8
submissions of the parties and the jurisprudence.
We thought that it was imperative, and our
9
So if I might, I propose simply to give you a very
10
brief overview of the decision and then to explain how this
11
decision fits into Mr. Kent Thomson's submissions of
12
yesterday.
13
If I could ask you, Panel members, if you would turn
14
to the second page of the decision, which is actually just
15
another title page.
16
17
Under the heading "Ontario Energy Board," there are
two recitals.
One reads:
18
"In the matter of the Ontario Energy Board Act."
19
The second one reads:
20
"And in the matter of a motion by Oakville Hydro
21
Electricity distribution under section 21.4 of the
22
Ontario Energy Board Act to vary the Board's May 11,
23
2005 written reasons for its oral decision of March
24
24, 2005."
25
I pause there to note two things.
One is that the
26
provision being referred to in the headnote, or in the
27
recital, is actually not in the Board's power to review,
28
which may in part explain why we didn't find that decision,
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but it is actually a provision of the OEB Act which
2
provides that, despite section 4.1 of the statutory powers
3
procedure act, the Board may, in addition to its powers
4
under that section, dispose of a proceeding without hearing
5
in specified circumstances.
6
So the headnote or the title of proceedings is
7
misleading.
8
attention.
I just wanted to draw that to the Board's
9
The context of this motion, very quickly, is, as I
10
understand it, Oakville Hydro had brought an application to
11
the Board to adjust its rate order on account of the fact
12
that it had lost a very significant customer and, by virtue
13
of having lost that customer, was going suffer a
14
significant reduction in its revenues.
15
That decision, in fact, upon reviewing the reasons,
16
you'll see, the decision and the conclusion and the outcome
17
of the application by Oakville Hydro were in no way
18
affected by this decision.
19
What this motion related to is, in the context of its
20
adjudication and hearing of the matter of the rate
21
application, the Board made a finding in respect of the
22
evidence given by Oakville Hydro, its experts, and the
23
evidence put forward by Oakville Hydro's lawyers.
24
Board suggested in this finding that Oakville Hydro had not
25
fully disclosed all of the relevant information or had
26
given incorrect information to the Board.
27
28
The
What this motion pertains to is it's a motion by
Oakville Hydro to have the paragraph in the decision of the
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Board referring to the incorrect evidence adduced by
2
Oakville Hydro struck from the decision of the Board.
3
That's the full extent of the relief being sought.
4
There was no question of revisiting the outcome of the
5
application, of changing the relief granted.
6
nature of -- I wouldn't put it at the level of a
7
typographical error, but it was basically housekeeping.
8
They were saying there was an error of fact in making this
9
finding and accordingly the finding should be struck from
10
the decision so that it doesn't appear in the decision as
11
published on the OEB website and available elsewhere.
12
It was in the
So if you turn to what's numbered as page 2 of the
13
decision, Ms. Christensen - and I won't take you through
14
this - on page 2 Ms. Christensen, counsel for Oakville
15
Hydro, sets out the impugned paragraph or finding of the
16
Board's decision, and then on page 3 lays out the grounds
17
upon which she is seeking a variance of the decision.
18
If you look, Chair and Panel members, at page 3, she
19
in effect cites three grounds.
She says that there was a
20
factual error in making the finding.
21
the ethical and reputational effect of the finding.
22
you'll also see at line 21 on page 3, she said:
23
"Third denial of procedural fairness.
24
and by extensions its experts and counsel, have been
25
denied procedural fairness."
26
The essence of the submission - and I would like to
She also discusses
And
Oakville Hydro,
27
try to distil it for you - is essentially that in making a
28
finding that was adverse to Oakville Hydro, that arguably,
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from Oakville Hydro's perspective, impugned Oakville Hydro
2
and its expert, that there was an obligation on the Board
3
to give Oakville Hydro advance notice that it intended to
4
make such a finding, and an obligation -- and an
5
opportunity to respond to those allegations before the
6
finding was made.
7
8
9
And that's the context of the submission of procedural
fairness that's being made.
If you turn to page 4, at line 4 she says -- she
10
refers to jurisdiction and remedy.
And I'll come to this
11
in a bit more detail, but she says that:
12
"The review panel has the jurisdiction to correct the
13
mistake of fact made by the panel, and so doing will
14
cure the absence of procedural fairness caused by the
15
initial decision."
16
And the relief sought is at lines 9 to 16, where she
17
basically said that the order should review and vary the
18
reasons of the Board on the Oakville application by
19
deleting the impugned paragraph and then replacing the
20
version posted on the website, and so on and so forth.
21
And if you will flip all the way forward to page 43,
22
because what Oakville Hydro did, actually, is they called
23
witnesses who gave evidence in front of Mr. Kaiser, who was
24
sitting alone, by himself, with a view to attempting to
25
clarify or to demonstrate the mistake of fact or the error
26
of fact made by the original Board.
27
28
And so if you turn to page 43, at line 7 - and I won't
take you through this, because I've already sort of
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summarized at a very high level - starting at line 7 are
2
Ms. Christensen's submissions concerning procedural
3
fairness.
4
submission is, under 126 -- section 126 of the OEB Act,
5
which talks about people being charged with contravening
6
the Act, and so on and so forth, she says this is akin to
7
these people having been charged under the Act.
8
9
And, again, she -- at the end of the day, her
There's been a finding that's been made against them,
and the SPPA, section 8 of the SPPA, and procedural
10
fairness and natural justice at common law requires that
11
any allegations that are made against them should have been
12
brought to their attention.
13
opportunity to respond before those findings were made in
14
the Board's decision.
They should have had an
15
And then if you flip forward to page 47, line 16,
16
you'll find there -- at 47 and following, you'll find there
17
Ms. Christensen's submission concerning the review panel's
18
jurisdiction to grant the relief that she was requesting.
19
And she says:
20
"The review panel have jurisdiction to correct the
21
mistake of fact made by the Panel.
22
may cure the absence of procedural fairness that was
23
generated by the reasons."
24
And then if you look down, she refers to section 21.2
In so doing, you
25
of the SPPA.
And I believe, actually, if one looks
26
closely, in light of Panel Member Spoel's comments
27
yesterday, I believe Ms. Christensen is actually citing the
28
old version of section 21.2, not the new version.
But
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2
that's just as an aside.
And then she continues on and refers to what she
3
refers to as section 43 of the Board's powers, which I take
4
to mean rule 43.01 of the Board's Rules of Practice.
5
And then she also continues on and refers to the
6
Russell case, which she says stands for the proposition
7
that the Board should be able to do justice where
8
necessary.
9
And then at page 49, she again repeats -- at lines 9
10
to 12, she repeats the relief that she's seeking.
11
Now, after Ms. Christensen's submissions are
12
completed, Mr. Millar, who is representing Board Staff,
13
stands up and makes his submissions.
14
in their totality are basically covered in a page and a
15
half.
And his submissions
At pages 49 and 50, those are his submissions.
16
And as we can see from the reasons, the Board Staff
17
did not oppose the relief being sought, did not make any
18
submissions as to the jurisdiction of the tribunal, any
19
submissions as to the rules and how they should be
20
construed, what relief could be granted pursuant to those
21
rules.
22
23
24
Board Staff essentially conceded that the relief being
sought should be given and that was that.
Mr. Kaiser then grants -- or gives his ruling or
25
decision on the motion, and that starts at the bottom of
26
page 52, line 27.
27
28
If I could ask the Panel members to flip to page 53,
and at line 6 I think this is the key portions for our
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purposes.
2
Mr. Kaiser says:
3
"This application raises serious questions of
4
procedural fairness and the integrity of the
5
administrative process before this Board.
6
applicant has requested the Board to exercise its
7
jurisdiction pursuant to section 21.6 ..."
8
I think he meant .2.
9
"... of the Statutory Powers Procedure Act and rule 62
The
10
and 63 of the Board's Rules of Practice And
11
Procedure."
12
And then he goes on to summarize -- Mr. Kaiser does,
13
goes on to summarize what the relief was that was asked and
14
to consider the evidence and the submissions that were
15
made, and ultimately he grants the relief that was sought.
16
Now, in our submission, it's very important, of
17
course, to situate this decision in the context of all the
18
decisions.
19
ten or eleven or twelve decisions of the Board yesterday,
20
on review, and I think he attempted to situate each of
21
those decisions and to explain how they fit together.
22
I think it's important to look at this decision in
23
perspective, as well.
24
I believe Mr. Kent Thomson took the panel to
And
There are a number of points that are very important.
25
One, of course, is the fact that the motion that was
26
brought by Oakville Hydro was unopposed.
27
nothing on the face of this decision that indicates
28
whatsoever that any of the submissions made by Mr. Thomson,
And there's
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by Mr. Leslie, by Mr. Cass, by the responding parties
2
concerning the construction of rule 44 were made to
3
Mr. Kaiser.
4
In fact, Mr. Kaiser refers to rules 62 and 63 of the
5
Rules of Practice, which are, in fact, the predecessor
6
rules, which, under (a)(1), included questions of law,
7
errors of jurisdiction, including breaches of natural
8
justice.
9
So it's not at all clear from the decision that
10
Mr. Kaiser -- that the change in the rules or their import
11
were brought to his attention, and, in fact, he may have
12
been operating under the misapprehension that the old
13
rules, including grounds for review for breaches of natural
14
justice or alleged breaches of natural justice, were still
15
in force and in effect.
16
It's also clear, as I said, that the threshold was not
17
argued.
18
with on consent, where Oakville Hydro came, made its
19
submissions, and Board Counsel, in less than two pages
20
essentially, indicated that it was unopposed to the relief
21
being sought.
22
accordingly.
23
This was a matter where it was effectively dealt
And Mr. Kaiser granted the relief
So in our view, the significance of this case is very
24
limited, and it in no way diminishes the force of the
25
arguments made by Mr. Thomson yesterday to the Panel, for
26
the various reasons that I've given.
27
28
And unless the Panel members have any questions for
me, those are my submissions on this decision.
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[Board confers]
2
MR. VLAHOS:
3
does it?
4
MR. AKMAN:
5
MR. VLAHOS:
6
Nothing to do with apprehension of bias,
Pardon me?
There's nothing to do with apprehension
of bias?
7
MR. AKMAN:
8
MR. VLAHOS:
9
MR. AKMAN:
No, no.
This is simply procedural fairness?
Yes.
Reasonable apprehension of bias, of
10
course, is one aspect of procedural fairness and natural
11
justice; and this was another aspect, which was simply
12
that, to the extent the Board was going to make any
13
findings that might reflect badly on the reputation of the
14
individuals who were involved, that they should be given an
15
opportunity to be heard and to respond to those allegations
16
before the finding was made and reproduced in the decision.
17
18
19
20
21
But, no, nothing with respect to bias at all in this
decision.
MR. VLAHOS:
Do you know, sir, whether the original
proceeding was written or oral?
MR. AKMAN:
I believe there was originally an oral --
22
as indicated at the very beginning of this decision -- and
23
I, frankly, am unfortunately tethered very much to the
24
decision, given my lack of experience with the Board and
25
with its decisions.
26
page 1, page number 1 - I believe it's lines 6 through 9 -
27
indicates that it's a motion to vary the Board's May 11,
28
2005 reasons, which related to an oral decision of March
But the Board's decision itself on
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24th, 2005.
So there were written reasons that were
2
produced by the Board after the oral decision was given.
3
MR. VLAHOS:
Thank you.
4
MS. NOWINA:
The moving parties will have a chance to
5
address this in their reply.
6
want to have an opportunity to make any brief comments on
7
this submission?
8
Mr. Warren?
9
REPLY SUBMISSIONS BY MR. WARREN:
10
MR. WARREN:
Do any of the other parties
Madam Chair, before I begin the main body
11
of my submissions, and while the submissions of my friend
12
are fresh in your mind, I'm driven to this observation:
13
don't know whether I should admire the brio with which my
14
friend makes these submissions or the staggering arrogance
15
and presumptiousness of it.
16
I
In order for him to sustain his argument, you have to
17
accept that very able and distinguished counsel
18
Ms. Christensen is unaware of the Board's rules.
19
to assume that Mr. Millar, appearing for Board Staff, is
20
unaware of the rules.
21
is unaware of the rules; that nobody had them in mind.
22
find that, with respect, almost inconceivable, but you need
23
to assume all of those things in order to give effect to
24
his argument.
25
You have
You have to assume that Mr. Kaiser
I
Before I begin my main submissions, I'd ask my
26
colleague Ms. Brousseau to deliver up some materials we've
27
assembled that are all directly responsive to submissions
28
that were made by counsel in the last 24 hours.
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MS. NOWINA:
Can we give this set of materials a --
2
MR. SCHUCH:
Yes.
3
Again, unfortunately, I don't have a copy of this
4
We are up to Exhibit J2.4.
group of materials.
5
MS. NOWINA:
You have to all keep Mr. Schuch in mind.
6
He's important to us.
7
MR. SCHUCH:
I wonder if we can label the group as one
8
group, rather than individual documents, and we will call
9
them the Submission Materials of CCC and VECC on Day 2 of
10
the Hearing.
How is that?
11
MS. NOWINA:
That's fine.
It's J2.3.
12
MR. SCHUCH:
That's J2.4.
13
MS. NOWINA:
Sorry, J2.4.
14
EXHIBIT NO. J2.4: SUBMISSION MATERIALS OF CC AND VECC,
15
HEARING DAY 2
16
MS. GIRIDHAR:
17
MR. WARREN:
Thank you.
Thank you, Madam Chair.
I want to begin, Madam Chair, with my
18
friend Kent Thomson's textual analysis of rule 44, and I'd
19
ask if you would turn up our book of authorities at tab 10,
20
which contains the text of rule 44.
21
MS. NOWINA:
Your book of authorities, Mr. Warren?
22
MR. WARREN:
Our book of authorities.
It's reproduced
23
in several books of authorities, but for ease of reference,
24
it's in ours at tab 10.
25
MS. NOWINA:
J1.1.
26
MR. WARREN:
Thank you, Madam Chair.
27
During the course of and towards the end of his
28
submissions, Mr. Thomson took you to rule 44 and, partly in
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response to questions from the Board Panel, was asked to
2
address the question of how the word "may" should be
3
interpreted.
4
I believe, Madam Chair, it was your question.
5
And Mr. Thomson said that in the context, you have to
6
7
read the word "may" as reading as being "must."
Now, I've passed up to the Board as the first item a
8
section of the Interpretation Act of Ontario.
9
reads as follows:
The section
10
"In the English version of an act, the word
11
'shall' shall be construed as imperative and the word
12
‘may’ as permissive.
13
used to express the present indicative form of the
14
relevant verb and occasionally by other verbs or
15
expressions that convey that meaning, inferring of a
16
power, right, authorization or permission is usually
17
expressed by the use of the word ‘voir’ and
18
occasionally by other expressions to convey those
19
meanings."
20
But it is the first sentence, the Interpretation Act
21
The French version of obligation
directs you to interpret the word ‘may’ as permissive.
22
So I say, with respect to Mr. Thomson, he's wrong.
23
The second interpretational tool or rule that he asked
24
you to apply was he said that you read error in fact,
25
change in circumstances, new facts that have arisen, as
26
being, in effect, conclusory, and anything else that would
27
be included in the word "may" is covered by what he called
28
the use of the generis rule.
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With that in mind, I'd ask you to turn up the second
2
portion of what I've put before you, which is a portion of
3
Sullivan and Roger on the construction of statutes.
4
5
Now, at page 175 of the text I put before you, you'll
see under the heading “Limited Class,” it says:
6
”The limited class rule (use in generis) in National
7
Bank of Greece (Canada) v. Katsikonouris, La Forest J.
8
explained the limited class rule as follows:
9
the particular document onus construing, one finds a
‘Where
10
clause that sets out a list of specific words’” - and
11
I underscore the following - “’followed by a general
12
term, it will normally be appropriate to limit the
13
general term to the genus of a narrow enumeration
14
which precedes it."
15
Then in the following pages, there are references in
16
case law which interpret that:
17
implies, in circumstances where there is a list of specific
18
words that follow a general term, which is not the case
19
with rule 44.01.
20
21
22
The use in generis rule
Now, the question may arise logically:
Does the
opposite apply?
In that context, I'd ask you to turn up in the same
23
document page 181.
In this case, we're dealing with
24
general words that precede specific words.
25
you turn to page 180, it is actually where the text begins.
I'm sorry, if
26
It says, and I'm reading the text:
27
"Some authorities have suggested that the limited
28
class rule cannot apply if the general words precede
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rather than follow the list of specific terms."
2
Then it refers again to the National Bank of Greece
3
case.
If I can ask you the turn over to page 181, it says:
4
"The Court was urged to limit the class of acts,
5
omissions or misrepresentations to those occurring
6
after the issuance of the policy on the ground that
7
the specific instances set out in the clause following
8
the word 'including' are all events that would
9
necessarily occur after the policy was issued.
10
However, La Forest took the position that the limited
11
class rule was inapplicable to this clause.
12
rule to apply, he asserted, the general words must
13
follow rather than precede the enumeration of
14
specifics."
15
Then the quote from Justice La Forest:
16
"Whatever the particular document one is construing,
17
when one finds a clause that sets out a list of
18
specific words followed by a general term, it will
19
normally be appropriate to limit the general term to
20
the genus of the following enumeration, but it would
21
be illogical to proceed in the same manner when a
22
general term precedes an enumeration of specific
23
examples.
24
that the purpose of providing specific example from
25
within a broad general category is to remove any
26
ambiguity as to what those examples are in fact
27
included in the category."
28
And then in the text below, it says:
For the
In this situation, it is logical to infer
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”Sometimes the enumeration of specifics has a
2
different purpose such as removing doubt respecting
3
the scope of the provision or expanding its scope by
4
adding specifics that would not ordinarily be included
5
in a general term.
6
provide examples."
7
I tender this portion of Driedger simply to make the
Sometimes the purpose is simply to
8
point of the use in generis rule doesn't apply.
9
Thomson was again, with respect, just wrong.
10
Mr. Kent
The plain and ordinary meaning of this clause may
11
include that it provides you with a broad right to
12
interpret the correctness standard; correctness appears in
13
the 44.01(a).
14
limit you to these categories.
15
16
17
And these are simply examples.
It doesn't
And I say, with respect, that Mr. Thomson and those
who follow him are simply wrong on that point.
The next observation I want to make - and it's a more
18
general one, with respect to the submissions of Mr. Thomson
19
- and if I refer to Mr. Thomson here, I'll refer to the bad
20
one and not to the good one.
21
Mr. Thomson's submission --
22
MS. NOWINA:
23
24
25
26
27
28
The Board doesn't necessarily accept
your ...
MR. WARREN:
It's just a rule of thumb for me,
Madam Chair.
MS. NOWINA:
We'll take it as a personal definition,
Mr. Warren.
MR. WARREN:
Mr. Thomson observes, and he puts some
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considerable emphasis on this, that the Board has broad and
2
expansive powers under the OEB Act.
3
submissions that the Minister has given the Board very
4
broad powers.
You'll remember his
5
He then says, in a manner which I submit is both
6
contradictory and counterintuitive, that when it comes to
7
the Board's remedial powers on review, they're
8
extraordinarily limited.
9
make sense for the Minister to have given the -- the
It doesn't, in my submission,
10
Legislature to have given the Board broad powers,
11
extraordinarily broad powers, over the entire energy sector
12
but then the Board has very limited powers to correct or
13
review its own decisions.
14
I submit, with respect, that the logic of
15
Mr. Thomson's argument is that the rule 44 powers of review
16
should be read in a way which is consistent with the
17
intention of the legislature to give you very broad powers.
18
19
20
And I'll return to that in a somewhat different
context in a moment.
Now, a third observation that is made by Mr. Thomson
21
is that the parties to -- in a regulatory proceeding should
22
take consistent positions.
23
And I don't think you need to turn it up, but the
24
reference is in yesterday's transcript at page 180.
He
25
says, in an observation which is quite breath-taking in its
26
scope:
27
"The Board is entitled to insist that parties to
28
proceedings before it take consistent positions from
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case to case and should treat arguments accordingly
2
that don't follow that very simple mandate."
3
Now, I have never heard that rule before, ever.
4
say, with great respect, there is simply no authority for
5
that rule.
6
correct, in the circumstances of the case before them, even
7
if they appear on the surface to be contradictory.
8
9
And I
Parties take positions which they believe are
But there are two important points to follow this.
Mr. Thomson directly, and my friend Mr. Cass by necessary
10
implication this morning, play this game of what I call
11
"advocacy gotcha".
12
different thing.
13
In some other context, you said a
Well, if those rules apply to me, they apply to
14
Mr. Cass, as well, who in various cases over many years has
15
argued for a very expansive view of the Board's powers.
16
But the Board is not bound by what any of us have said
17
to you in other cases.
18
articulated the right standard for this case.
19
The key is whether or not we've
And Mr. Janigan and I, I think the good Mr. Thompson
20
as well, would say we meet whatever high standard the Board
21
chooses to apply, but there are manifest problems in this
22
decision which it is incumbent upon the Board to correct.
23
The fourth point I want to respond to arises in an
24
exchange that Mr. Thomson had, Mr. Vlahos, largely with you
25
yesterday afternoon.
26
set of exchanges over appeals.
27
more immediately factual:
28
Divisional Court?
And you'll remember the context was a
Your questions were really
Could there be an appeal to the
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But in the course of responding to that question,
2
Mr. Thomson said that the Divisional Court is the proper
3
place to argue about errors of law.
4
Now, the third item which I have put before you is a
5
section of your statute, section 33.
And I bring that to
6
your attention only because -- to underscore the point that
7
the powers of the Divisional Court on an appeal, if you
8
look at subsection 33(2), that an appeal can be made only
9
on a question of law or jurisdiction.
The terms of the
10
correct application, for example, of regulatory principles
11
cannot be considered on an appeal to the Divisional Court.
12
It is much narrower.
13
Now, it's interesting that Mr. Thomson didn't point
14
out to you what is common knowledge, certainly among the
15
lawyers in the room, is that the jurisprudence of the
16
Superior Courts in this country over the last 15 years
17
have, again and again and again, emphasized that it is the
18
responsibility, the obligation, the particular skill of
19
specialized tribunals to interpret their statutes and to
20
apply those statutes to the facts in front of them.
21
So the irony would be that if we took an appeal of the
22
NGEIR decision to the Divisional Court, Mr. Thomson would
23
appear opposite and say, Sorry, you've got to give due
24
deference to the original decision, because they got it
25
right.
26
Now, I've added two cases.
One is a decision of the
27
Divisional Court in the Enbridge Gas Distribution case, and
28
the second is a case involving the Ontario Information and
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Privacy Commission.
2
for the following reason.
3
4
I want to refer to them very briefly
In the Enbridge case, I'd ask you to turn up page 6 of
the reported decision, paragraph 24:
5
"In this case, the expertise of the tribunal in
6
regulatory matters is unquestioned.
7
specialized and technical area of expertise.
8
also recognized that the legislation, as well as
9
economic regulation of energy resources, including
This is a highly
It is
10
setting prices for energy which are fair to the
11
distributors and suppliers while at the same time are
12
a reasonable cost for the consumer to pay, this will
13
frequently engage the balancing of competing
14
interests, as well as consideration of broad public
15
policy.
16
deference to the Board and applied standards of
17
reasonableness simpliciter or even patent
18
unreasonableness when reviewing decisions which
19
engages the Board's expertise."
20
And then they set out a number of decisions to that
21
22
23
24
This is why courts have accorded considerable
effect.
Now, this decision was reversed on appeal, but this
particular finding was not disturbed on appeal.
Now, the second case is the Information and Privacy
25
Commissioner case.
And I'd ask you to turn up page 12 of
26
that decision - sorry - yes, page 12 of that decision,
27
where the observation is made - and, again, this is a
28
decision of the Divisional Court - beginning at paragraph
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37:
2
"Even where the legislature has provided a right of
3
appeal to the courts, curial deference should be given
4
to the opinion of an administrative tribunal which
5
enjoys the requisite quality of specialized expertise
6
on issues which fall squarely within its area of
7
expertise ..."
8
Citing the Bell Canada case in the Supreme Court of
9
Canada.
10
Then paragraph 38:
11
"In such cases, the court should not interfere unless
12
the tribunal's decision is not reasonable or is
13
clearly wrong."
14
And then, finally, paragraph 39:
15
"Absent a privative clause, therefore, the courts will
16
show curial deference towards certain specialized
17
tribunals when engaged in tasks which lie at the heart
18
of their expertise."
19
And I won't read it in its entirety, but I would refer
20
you on page 14 to paragraphs 50, 51, 52, and 53 to the same
21
effect.
22
Now, the reason I cite those decisions is this:
In
23
our respectful submission, the place where decisions should
24
be made about what a statutory provision means, in the
25
context of the legislation, in the context of the policy
26
considerations that you have to apply, is this tribunal.
27
If you go to the Divisional Court, there will be a
28
series of arcane arguments about whether the Divisional
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Court should interfere, and so on and so forth.
2
If you went to the Minister, the Minister would say,
3
That's why we gave the power to the tribunal, so that the
4
Cabinet office doesn't have to make these decisions.
5
And I make these submissions in the context of saying
6
that -- simply reinforcing the point that it is important
7
that a decision about the correct interpretation of
8
section 29 be made by you; that is, by the Energy Board.
9
If there are problems with the original decision, then it
10
falls to the Energy Board in the first instance to correct
11
them.
12
My fifth submission deals with respect to the argument
13
of Mr. Thomson with respect to the Board changes to its
14
rules.
15
Now, the difficulty I have with Mr. Thomson's argument
16
is that the only way it can be sustained is that if
17
literally everyone following the 2002 rules got it wrong.
18
And I don't make that observation facetiously.
19
It means that the Board has to have missed the point
20
of the rule changes.
21
have the highest regard, has to have missed the import of
22
those rule changes.
23
that has appeared before you, including -- I don't know
24
whether my friend Mr. Leslie has appeared in these motions,
25
but certainly Mr. Penny has appeared in these motions;
26
Mr. Cass has appeared on them; Mr. Thompson; I've appeared
27
on them.
28
It means that Board Staff, for whom I
It means that every single counsel
And we've all missed the point of the rules.
Now, is everyone in the world wrong except
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Mr. Thomson?
2
analysis which the Board has consistently applied to these
3
rules is that the Board has the power to correct for a
4
broad range of errors.
5
Surely the logical conclusion is that the
I would ask the Board to turn up the authorities, book
6
of authorities, of Mr. Thomson.
7
with three decisions that appear.
8
tab 6.
9
And I want to deal quickly
The first appears at
This is the decision dated October 6th, 2005.
It
10
postdates the changes to the rules, and the test that was
11
applied by the Board in that case -- and this has been
12
referred to, again, but I need to emphasize the point that
13
at page 7 of that reported decision:
14
"In considering a motion to vary, the Board considers
15
all the new evidence which is presented by the
16
applicant or whether the original panel made an error
17
in law or principle so as to justify the reversal of
18
the decision."
19
That's a decision that included, I say, with respect,
20
21
two vice-chairs of the Board.
Is it the case that just because nobody ever raised
22
this argument that the Board missed it?
23
that decision, as in other decisions I'll refer to in a
24
moment, took a look at section 44, understood section 44,
25
and said it conveys in the word "may" a broad power.
26
No.
The Board in
I should say, incidentally, that the moving parties
27
rely on these decisions as being an expression of the
28
Board's view of rule 44.
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MR. AKMAN:
Madame Justice Chair, I'm very sorry to
2
interrupt my friend, but I have some concerns about the
3
submissions being made, to the extent that, in my view -
4
and I stand to be corrected - but they seem to be a
5
repetition of Mr. Warren's submissions in the beginning of
6
the proceedings yesterday.
7
cases and explained why, in his view, the cases suggested
8
that our interpretation of the rules and the significance
9
of the change were in error, and it strikes me that he is
Mr. Warren took you to the
10
going over the same ground he addressed in his submissions
11
at the beginning of the proceedings.
12
reply.
13
MR. WARREN:
This is not proper
Madam Chair, I'm simply going at the
14
argument Mr. Kent made last afternoon, going over these
15
same decisions.
16
MS. NOWINA:
But the argument he made yesterday
17
afternoon was in his factum, and you did respond to it
18
earlier.
19
20
MR. WARREN:
Fair enough, Madam Chair, but if I can, I
simply want to refer to two more decisions.
21
MS. NOWINA:
That you've already gone to?
22
MR. WARREN:
I haven't gone to them yet.
23
24
25
26
27
28
I didn't go
to them yesterday.
MS. NOWINA:
If you didn't go to them yesterday, you
can feel free to do that.
MR. WARREN:
The second decision is at tab 9.
There
the Board says:
"In the specific circumstances” - at page 4 – “the
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Board recognized that confirmation or clarification
2
might be helpful."
3
Now, the importance of that particular reference is
4
that the Board needs the flexibility that rule 44 gives
5
them to correct their decisions to ensure that they're
6
consistent with policy, because if Mr. Thomson's argument
7
and analysis is accepted, you couldn't do this, just as
8
you, the Board, couldn't have done what it did in the
9
Oakville case.
10
That's an important point, because if you follow the
11
logic of Mr. Thomson's argument and analysis yesterday, you
12
have really severely limited your power to correct
13
decisions in circumstances like the Oakville case and to
14
ensure that there is consistency in policy and decision-
15
making.
16
My next point, Madam Chair, is with respect to the
17
argument that was made largely by my friend Mr. Leslie this
18
morning.
19
by my friends Mr. Smith and Mr. Cass, is that we're simply
20
re-arguing our case.
21
that all of the arguments that we've made were made before
22
the Board in the first instance, and, in addition, the
23
Board considered all of those arguments.
24
The burden of that argument, which is also made
And they say, as a corollary of that,
I want to bring two sections of the Board's decision
25
to your attention.
26
friend Mr. Leslie in his argument this morning, in which he
27
referred specifically to page 50.
28
The first one was referred to by my
The particular issue under consideration there was the
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development of storage under the old existing status quo or
2
the new status of the new forbearance regime had been fully
3
considered by the Board.
4
were fully canvassed.
5
6
7
8
9
10
11
Those were his words.
All topics
Now, if the Board looks on page 50 at the middle
paragraph -MS. NOWINA:
Mr. Warren.
I'm still trying to find my decision,
It got buried.
I have it.
MR. WARREN:
Page 50?
Page 50.
This is the one that my friend
Mr. Leslie referred to this morning.
12
MS. NOWINA:
Thanks.
13
MR. WARREN:
You'll see in the middle paragraph there:
14
"The Board concludes” - sorry, it's actually the first
15
full paragraph on the page - “concludes that it was
16
appropriate to facilitate the development of storage
17
to offer these services without undue risk for
18
ratepayers."
19
Well, two observations.
That's not the test.
The
20
test is whether there's competition sufficient to protect
21
the public interest.
22
Now, we would not have known that that was the test.
23
And we would not have known that was the Board's
24
interpretation of section 29 until we got the decision.
25
all of the arguments weren't made.
26
been made.
27
28
So
And they couldn't have
The second thing I want to take you through as briefly
as I can, again in the context of this argument that it's
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all been argued before -- and the starting point -- I'll
2
try and summarize this briefly.
3
this analysis of this point is on page 57 of the Board's
4
decision.
5
The starting point for
On page 57 of the Board's decision - and I read this
6
to you again yesterday, and I won't read it again - but
7
this is the section of the decision in which the Board
8
says:
9
franchise customers taking bundled services sufficient to
10
11
12
It's clear that there isn't competition for in-
protect the public interest.
And I only, because it's necessary for my argument,
take you to the last sentence on page 57:
13
"The current situation is that these customers are not
14
subject to competition sufficient to protect the
15
public interest” - and then I want to underscore the
16
following words - “nor is there a reasonable prospect
17
that they will be at some time in the future."
18
If the Board then turns over to page 63, the last full
19
paragraph, the Board says:
20
"The issue is whether Enbridge and Kingston, as
21
purchasers of storage for bundled customers, should
22
receive regulated cost-based storage services per
23
unit.
24
the storage services they acquire are subject to
25
competition sufficient to protect the public
26
interest."
27
That is an apparent contradiction.
28
The Board concludes that they should because
We wouldn't have
been aware of that apparent contradiction until the
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2
decision was issued.
Then to address that problem, we then go to page 64 of
3
the Board's decision, in which the Board uses the
4
transitional measures.
5
And it says that the contracts between Enbridge and
6
Union will be - this is my term, not the Board's term -
7
reconstructed in order to extend the time within which the
8
Enbridge consumers will have to pay market prices.
9
We would not have known about those transitional
10
measures and then raised the argument about whether
11
transitional measures were an adequate substitute for a
12
finding of competition sufficient to protect the public
13
interest until we got the decision.
14
15
16
So we're not re-arguing the case.
We're basing on
arguments on what's in the decision.
In the same vein, the same line of analysis, is the
17
point that my friend Mr. Janigan made about the
18
restructuring of the asset holdings.
19
known that until we got the decision.
20
We would not have
Now, the two final points that I want to make in the
21
time remaining to me, one of which is a point which is made
22
by a number of counsel, including Mr. Leslie and, I
23
believe, Mr. Smith, and I apologize to Mr. Cass if he did
24
and I didn't get.
25
something special about the fact that the original panel
26
actually heard the evidence.
27
28
This is the question that there is
As I think there's common agreement on, although I
don't know that Mr. Smith and I are ad idem on this, none
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of the findings of the Board turn on questions of
2
credibility, which is one of the reasons you have to hear
3
-- that an appeal panel is reluctant to interfere with a
4
trial judge on.
5
The reason that an oral hearing is preferred in
6
certain circumstances is not because, as someone put it
7
rather dramatically, you have to look in the whites of the
8
eyes of the witnesses.
9
parties and the sitting panel with more flexibility to
10
It's because it provides the
answer/ask questions.
11
It's often put by intervenor parties like the one I
12
represent that the importance of an oral hearing lies in
13
the ability to cross-examine witnesses, to ask follow-up
14
questions in order to have a complete record, something
15
which is very difficult to do in an oral hearing.
16
17
18
But once you have it on the transcript, you don't need
any more.
So I say, with respect, in this circumstance, that you
19
can - this Panel or another panel so constituted of this
20
Board - could understand the reasoning of the Board, to the
21
extent that you can, simply by reading the transcript.
22
There's no magic in it.
23
The final point I wanted to make - and this is
24
responsive to, I think, the point Mr. Cass made in
25
particular - is that there is a particularly high standard
26
of review, and I say we've met the highest standard of
27
review.
28
In the two instances I have put to you a moment ago on
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the transcript, or Mr. Janigan's point about restructuring
2
the asset market, those are manifest problems, if you wish,
3
or errors in the Board's decision, and that if this
4
important section is to be understood in a coherent way,
5
they demand a review of the Board.
6
Those are my submissions, and I think I'm on time.
7
MS. NOWINA:
8
QUESTIONS BY THE BOARD:
9
MR. VLAHOS:
Thank you, Mr. Warren.
Mr. Warren, just one question.
You were
10
arguing about those matters of law and jurisdiction, if you
11
like.
12
through the reasons why.
13
meant to capture Mr. Thompson to the left, Mr. Big
14
Thompson.
They probably belong here first.
And you worked
I wasn't sure whether you also
15
MS. NOWINA:
Mr. Thompson with a P.
16
MR. VLAHOS:
With a P.
17
MR. THOMPSON:
18
MR. VLAHOS:
I think “bad”/”good” sounds better.
His argument of the Panel crossing the
19
line, whether that is also a matter that rightly belongs
20
here, as opposed to the Divisional Court, I wasn't sure
21
whether you meant to capture that or not.
22
MR. WARREN:
Mr. Vlahos, can I leave that question to
23
be answered by Mr. Thompson?
24
argument and not mine, and I think Mr. Thompson -- anything
25
I might say might prejudice what he's going to say in a
26
moment.
27
28
MR. VLAHOS:
That's really his line of
I was interested to hear what you had in
mind, though, that those matters belong to this Panel, as
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2
opposed to some other.
MR. WARREN:
I think as a matter of law and as a
3
matter of policy, that this Board should reserve to itself
4
the full right to correct errors in the decision.
5
been vested with immense responsibility for the regulation
6
of the energy sector.
7
that all aspects of arriving at a decision and the decision
8
itself should fall within your purview, in the first
9
instance.
It's
This is an important section, and
10
MR. VLAHOS:
Thank you.
11
MS. NOWINA:
Mr. Thompson, I'll remind you that I will
12
keep you to half an hour, and I also remind you that reply
13
is to respond to the argument, the submissions that other
14
parties have made in the oral proceedings.
15
REPLY SUBMISSIONS BY MR. THOMPSON:
16
MR. THOMPSON:
Thank you, Madam Chair.
You didn't
17
start off with Mr. Warren like that, so I'm a little
18
intimidated.
19
I'll try and be brief.
I've organized my reply submissions into three topic
20
areas:
The first is with respect to the threshold test;
21
the second is with respect to errors; and the third, then,
22
is with respect to what I call the disqualification issue.
23
Dealing with the first topic, counsel for Board Staff
24
made a point that a review is not an appeal.
I agree with
25
that to this extent:
26
one gets a review depends upon an exercise of the Board's
27
discretion, but once a review is granted, it's my
28
submission it proceeds as the Board directs and it could be
There's no right to review.
Whether
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quite like an appeal; i.e., a paper process, or whatever
2
add-ons thereto that the Board might direct.
3
And in terms of the relief that the Board can grant on
4
a review, it's, again, quite similar to an appeal.
5
confirm, vary, suspend, or cancel the order being
6
challenged.
7
You can
Another point that counsel for Board Staff mentioned
8
was timing for the rights of appeal.
Under the statute,
9
this would be to the courts or Cabinet.
And the only point
10
I wanted to make here is that an appeal lies to the court
11
or to the Cabinet from your Panel's decision, as well,
12
whatever the timing might be with respect to the NGEIR
13
decision.
14
Counsel for Board Staff and other counsel urge you to
15
be restrictive when exercising your discretion with respect
16
to requests for review.
17
my client, we had agreed with that proposition
18
substantially in argument-in-chief.
19
And I thought that, speaking for
I agree that the case has to be unusual.
It has to be
20
reasonably clear.
21
instance is something that is important and that was a
22
matter that prompted the Board in one of the cases at
23
tab 13 of the Board Staff brief to actually allow the
24
review to go forward.
25
granted.
26
And I repeat that a case of first
In the end, the review was not
There were some submissions, by counsel opposite in
27
interest to IGUA, with respect to the grounds for a review
28
request - and, like Mr. Warren, I refer you to the rules -
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where the grounds are error.
And the language is not as
2
inclusive, as he has already pointed out to you.
3
As to this question of whether the rule now is
4
narrower or broader than what it was before, I leave that
5
to you to determine.
6
as it was previously.
7
Quite frankly, I think it is as broad
But to the point that counsel for Board Staff was
8
making to the effect that you must be mindful of the
9
potential abusers of this rule, I simply point out:
Of the
10
nine reviews that have been initiated - well, actually, the
11
tenth, which we had this exhibit this morning which counsel
12
for Board Staff has brought to your attention - one of them
13
was initiated by ratepayer interests, such as the three
14
amigos sitting here, and another one was by Mr. Crockford.
15
So eight out of the ten are utility-initiated
16
processes, and so I don't think there's any weight that you
17
should give to this abuser concept, or the floodgates will
18
open if you don't construe your review power extremely
19
narrowly.
20
In terms of the grounds for the motion for review,
21
Mr. Cass was making a point that you need to allege
22
specific grounds for error, and I submit that we have done
23
that in paragraph 14 of our factum.
24
in the motion.
25
I thought it was done
As well, Mr. Cass curiously moves from that point,
26
saying you have to allege specific error, suggesting that
27
if a review is confined to specific error, his client might
28
be prejudiced, because he lost on -- or it lost on a few
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2
points.
That, in my submission, is not a ground for rejecting
3
a review request.
If Enbridge or anybody else wishes to
4
argue points on which it says it lost and can demonstrate
5
error, it has the right to request for review like anyone
6
else.
7
The point about finality, we agree that there should
8
be this principle of finality, but the finality principle
9
you should recognize applies to decisions except for errors
10
therein.
11
that made that point.
12
And there was a case that was cited yesterday
If a party is dissatisfied with a decision because of
13
errors contained in it, then, for the purposes of review
14
requests and appeals, it's not final.
15
On the point about the scope of the errors that the
16
Board should regard as reviewable and the submissions of
17
those who would have you confine that to errors of fact, I
18
submit that that's not a sensible approach.
19
reject it and would note that under section 19(1) of your
20
legislation, you have jurisdiction to hear and determine
21
all questions of law and fact.
22
I urge you to
And the suggestion that you should ignore the full
23
scope of that statutory authority when it comes to hearing
24
review application, in my submission, is incompatible with
25
that provision of your legislation.
26
You should not, in my submission, refrain from
27
considering a request for review based on an alleged error
28
of law or jurisdiction, including a breach of natural
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justice, because, as Mr. Warren has indicated, you are as
2
capable as a court in considering these issues.
3
And you should also bear in mind, under section 32 of
4
your legislation you do have the power, of your own motion
5
or on request, to refer a question of law to the court,
6
either before deciding it or after.
7
have to have power -- you have to consider the questions of
8
law and jurisdiction, so that the notion that alleged
9
errors of law and jurisdiction, including breaches of
And to do that, you
10
natural justice, fall outside the ambit of your review
11
power, I submit, is inconsistent and incompatible with both
12
19(1) and section 32(1) of the OEB Act.
13
In addition, with respect to this disqualification as
14
an adjudicator’s issue that my client raises and the
15
resulting invalidity of the NGEIR decision, or the
16
questionable invalidity of the NGEIR decision, the law
17
requires IGUA to raise that issue before the Board, to
18
allow the Board to respond, and so the Court can have the
19
benefit of the Board's response to the issue.
20
alternative, you can state a case to the Court for its
21
opinion, if that is your wish.
22
Or, in the
Let me move from there to the nature of the errors,
23
because my client's request for review is based upon
24
arguable errors, as I mentioned yesterday.
25
My client's request for review - and I believe my
26
friends Mr. Warren and Mr. Janigan are the same - these
27
errors, in our view, are extricable from the record.
28
can be demonstrated to a new panel on the basis of the
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record as it stands.
2
errors.
3
A new panel will recognize the
Mr. Warren has focussed on the errors in the
4
interpretation of section 29.
5
to that - and they were the focus of my submissions
6
yesterday - are the errors in applying the analytical tests
7
used to evaluate market power.
8
9
The two points I want to add
That's the first one.
The point I'd like to emphasize is that the steps in
the market power analysis, which I've set out in my factum,
10
are not matters subject to interpretation or conflicting
11
evidence or disagreements amongst experts.
12
stem right from the words of the analytical tests which I
13
read to you yesterday.
14
Those steps
To be a good substitute, it must be available soon
15
enough, have a price low enough and a quality high enough
16
to permit customers to substitute the alternative.
17
Alternative.
That's the language from which those
18
steps derive.
You don't need to have a parade of witnesses
19
to help you understand those words.
20
The way Mr. Leslie presents these tests to you, and
21
the way the utilities presented them to the NGEIR panel,
22
was as if there's no price factor, no quantities factor, in
23
these analytical tests.
24
that's wrong.
25
what the tribunal did that decided this case.
26
They just sloughed them off.
That's dead wrong.
And
Unfortunately, that's
And I pointed you to the reasons, where they did it.
27
They did not factor the price and quantities criteria into
28
their analysis.
That was a little separate stand-alone
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2
portion of the decision.
Mr. Leslie made a point about the transaction point.
3
He criticized my characterization of the tests applying at
4
Dawn.
5
Well, the transaction area in the questions that the
6
Board framed for the NGEIR proceeding was Ontario, storage
7
services in Ontario.
8
everything for distribution customers was not subject to
9
sufficient competition to protect the public interest, the
10
11
Once the evidence came in that
only transaction point left is the Dawn hub.
So I suggest he's just plain wrong when he says that
12
the Dawn transaction point is somehow a contested issue of
13
fact.
14
The policy issue in this case was whether forbearance
15
relief was justified or whether the range rate, market-
16
based rate regulatory regime continued to be appropriate.
17
And forbearance is not a decision-making option if
18
there is no evidence to establish that Union lacked market
19
power at Dawn in the provision of storage services,
20
excluding the commodity.
21
That's important.
We're not talking about bundled gas
22
commodity at Dawn; we're talking about storage services,
23
space, injection, and withdrawal.
24
We had a parade of witnesses that indicated in the
25
primary market - i.e., storage from Michigan and
26
transportation to Dawn in the primary market - it would not
27
be price-competitive.
28
That then took the tribunal to the secondary market,
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and so this is why the thing focussed on the secondary
2
market.
3
much delivery, re-delivery service transacted at Dawn, or
4
the price at which it transacted.
5
satisfy these critical components of that test.
6
And there was not one witness who could say how
Were the arguments raised?
There was no evidence to
Yes.
7
by the Board in their reasons?
8
critical factors were not addressed.
9
10
11
12
13
Were they addressed
No, absolutely not.
Those
That's the error.
If the review Panel agrees with that as the error,
then the forbearance relief falls by the wayside.
So is this error of sufficient magnitude to alter the
decision?
Yes.
Clearly, yes.
Now, the other error that I just wanted to respond to
14
was -- and this is Mr. Leslie's submission primarily.
15
says the status quo was addressed in the decision.
16
submit to you, on a fair reading of the decision, that is
17
clearly incorrect.
18
He
I
I want to come back to, in that context, the question
19
that the Board expressed in its NGF report.
And you will
20
find this quoted in paragraph 41 of my factum:
21
"The basic question facing the Board is whether any
22
action is required with respect to its policies for
23
gas storage and transportation."
24
That question was quoted in the decision, and there
25
was no analysis whatsoever of the market-based range rate
26
regime's ability to respond to the concerns about which the
27
Board expressed in its decision.
28
And so, not addressed, is my submission in response to
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2
Mr. Leslie.
Mr. Smith takes the view that, Well, don't review this
3
now because if we have to go back to a market-based rates
4
regime, that will be of great prejudice to MHP Canada.
5
I submit that, on a plain reading of their argument,
6
which you'll find as a tab in Enbridge material, is
7
incorrect.
8
alternative, market-based rates regime for independent
9
storage operators, and the Board in its NGEIR report had
MHP's request was for forbearance and, in the
10
indicated that that was the regime that was being applied
11
to Tribute, and my client agreed that that's the kind of
12
regime that should apply to MHP Canada.
13
relief on the core points.
14
We supported
But the difference between the market-based storage
15
pricing regime and the forbearance regime I've referenced
16
in my factum - it's in paragraph 31 - the essential
17
difference is that under the market-based rates regime, the
18
Board monitors returns to shareholders.
19
One of the errors that I alleged yesterday was that
20
the Board did not, in its reason, even look at that issue
21
in its NGEIR decision.
22
those returns are, what the evidence indicated those
23
returns are for Union.
24
25
26
And in my factum, I point out what
You'll find that in -- I think it's in the impacts
piece, paragraph 78 and 79.
And the evidence indicated that on the ex-franchise
27
storage assets, if they got what they were after, which was
28
the 44 million - that's at a dollar per gJ - the return
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would go from an allowed 9.-something percent to
2
86 percent.
3
2 bucks.
4
million; they gave them about 33, I think, if you go back
5
and do the math.
6
And, you know, we know the value is now up to
The Board didn't give them all of the 44-1/2
But that's the difference.
Under market-based rates,
7
the Board monitors that and determines how that should be
8
allocated under its sharing arrangements.
9
forbearance, that gets masked.
10
11
Under
And so that's really the difference between the two
regimes on that return issue.
12
And in the context of MHP Canada, what it would mean,
13
it would simply mean the Board would monitor their returns.
14
We weren't asking that there be some predetermined allowed
15
return for independent storage operators.
16
the Board, under its mandate, to monitor.
17
We just wanted
The last topic that I want to speak to is the
18
disqualification issue in reply to points made by my
19
client's submissions there.
20
Mr. Smith says we are alleging bad faith.
That is not
21
so.
22
Board Panel acted in bad faith.
23
that the Board Panel takes of the scope of its public
24
policy matters and the extent to which it can descend into
25
the arena is different than the view my client takes and
26
what we say the law allows for a Board acting in an
27
adjudicative role.
28
I do not assert, and did not assert at any time, the
It appears that the view
What is summarized in my factum, and counsel for Board
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Staff referred to this - it's in the paragraphs 51 to 59,
2
under the heading "Conduct of Board Members During the
3
Hearing" - has to be read in the context of paragraph 13.
4
This whole section of the factum is, on page 3, relevant
5
facts:
6
"The facts which IGUA submits are relevant to a
7
consideration of the motion for review are as
8
follows ..."
9
So all I was summarizing there were the facts as to
10
what happened during the course of the hearing, and those
11
facts, in my submission, support the conclusory fact that's
12
in paragraph 59 of the factum.
13
So I think it's unfair to characterize them as
14
complaints.
As I said, I thought yesterday, when we're
15
faced with facts that give rise to a disqualification
16
issue, then the obligation of counsel - and if the clients
17
instruct them - are to raise them.
18
Now, in terms of frequency of issues of this nature
19
occurring before the Board - and counsel for Board Staff
20
talked about that in the context of, How frequently does
21
the Board have to address natural justice issues? - I've
22
been practicing before this Board for 34 years, and this is
23
the second occasion that I've been involved in one of these
24
types of cases.
25
I know that recently Union alleged -- made allegations
26
of this nature in connection with the cushion gas hearing,
27
and their point was because the Board had participated in
28
the Atco case in the Supreme Court of Canada, that gave
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rise to a disqualification-type issue; but when the facts
2
appear, one can expect that the issue will be raised.
3
Now, counsel for Board Staff went through the
4
paragraphs in my factum, 51 through 58, and dismissed them
5
either as totally without merit, or red herrings, or a
6
combination of both.
7
that whether he was attempting to suggest what's described
8
in there didn't happen, because if that's what he was
9
suggesting, he's quite wrong.
10
And I don't know when he was doing
And I just want to quickly touch on the supporting
11
material, show you where it is in the record, with respect
12
to these allegations, because at the end of counsel for
13
Board Staff's submissions, he said, Nothing unusual
14
happened here.
15
Nothing unusual happened here.
And in that context, he submitted that it's not
16
unusual for members of the Board to probe and that they
17
should probe significantly.
18
quarrel with that, that the Board and Panel members must
19
probe the evidence that appears before them.
20
sit there passively like Mortimer Snerd and do and say
21
nothing.
I accept that.
I don't
They don't
22
But there's a difference between probing and trying to
23
obtain admissions to support some sort of policy direction.
24
Similarly, I readily concede that Board members, given
25
their expertise, should be participating in the process
26
more than a judge might be permitted to.
27
when I was referring to the Newfoundland case, that the
28
spectrum was judges and then elected tribunals at the far
And I thought
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end; but even with elected tribunals, the case, what it
2
said, was, If you are faced with a situation where the
3
point that you were asking the Board to consider was futile
4
to present it, then, even then, with elected officials,
5
they're offside the law.
6
My submission is the Board, in this particular case,
7
is not that far to the right of -- to leniency, but it's
8
certainly not as confined and restricted as the cases that
9
apply to judges.
10
The fact that a case may have policy overtones, in my
11
respectful submission, doesn't give the members of the
12
tribunal that are being asked to decide that policy issue,
13
where there's competing policies before the Board for
14
adjudication, which one is more appropriate.
15
It doesn't give them the right to descend in the arena
16
-- into the arena in an attempt to obtain evidence to
17
support a particular policy position, particularly when the
18
policy alternatives are matters in dispute.
19
issue in this case was forbearance versus market-based --
20
attention to the market-based regime.
21
22
23
MR. KAISER:
And the policy
Mr. Thompson, you're getting pretty
repetitive of your previous submissions.
MR. THOMPSON:
Thank you.
I'm just concluding, then,
24
if I might, with -- just if I could give you some
25
references and ask you to take these points into account.
26
In the factum and in my materials brief, I have
27
extracted the excerpt that's referred to in paragraph 52 of
28
the factum.
You'll find that in the brief at tab 28.
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Then the discussion that followed about that that's
2
referred to in paragraph 53, you'll find at tab 29.
3
then there was objections that were raised about this, and
4
you'll find the objections and the entire transcript and
5
the Board's ruling at tab 30.
6
discussion should take place on the public record.
7
And
And the Board ruled that
And then, after the ruling but before the appearance
8
of BP, what we received was this e-mail from the Board
9
support team - i.e., the Panel's lawyer - which had the
10
11
12
questions attached, and it was -MR. KAISER:
We went through that yesterday,
Mr. Thompson.
13
MR. THOMPSON:
All right.
That's at 32.
14
Then the motion about that and the submission made,
15
and the manner in which the matter proceeds at tab 31.
16
The point that I only wanted to make here is
17
paragraph 54 was something that I thought counsel for the
18
Board staff was suggesting was not in record, or something
19
to that effect.
20
You'll find the information pertaining to that, that
21
came from counsel for BP.
That didn't come from me.
22
came from counsel for BP.
It's at tab 31.
23
It
I submit that when you look at all of that, it's
24
inappropriate to characterize what happened in this case as
25
"nothing unusual took place."
26
unusual, and, despite the evidence that the Board arranged
27
to have presented by special invitation didn't establish
28
anything, the findings made were as if the evidence had
What took place was highly
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established something.
2
silent on the status quo, as well as it ignored the crucial
3
factors with respect to the analytical tests, as I've
4
indicated.
5
And the decision is completely
I submit a review should be granted, and with respect
6
to who conducts it - and this is my last point -
7
Mr. Leslie's point that it should be the same panel that
8
heard the original case, I would suggest that ought not to
9
be the case and that the more appropriate approach is to
10
have a different panel hear the review application, for all
11
of the reasons that I've described, dealing with the
12
disqualification issue.
13
Thank you very much.
Those are my submissions.
14
[Board confers]
15
MS. NOWINA:
16
QUESTIONS BY THE BOARD:
17
MS. SPOEL:
We have some questions, Mr. Thompson.
Mr. Thompson, just one question.
You
18
referred to the obligation of the Panel in this case to
19
raise the issue of - I'm going to use the word “bias”,
20
although I don't think that's the word you used - and the
21
obligation of the Board to respond to it.
22
that in the context of receiving a decision.
23
whether or not that wasn't something you should have done
24
during the course of the hearing itself if it appeared to
25
you that that was becoming a problem.
26
MR. THOMPSON:
27
in the factum.
28
what we said:
Yes, and we did that.
Yes, paragraph 56.
You referred to
I wondered
I believe it's
We raised this, and
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"We don't know where this is all going to lead us, but
2
I am instructed to record that my client suggests that
3
there is now information on this record to cause
4
reasonable people to question the objectivity of the
5
Panel with respect to matters pertaining to these
6
secondary market issues, and we reserve our rights to
7
rely on this state of affairs if necessary."
8
And then I've referenced, “The Board noted our
9
objections," and carried on.
You'll find what the Board
10
said in response to that in the materials that I've
11
provided to you.
12
So like Mr. Moran, we didn't know where this was
13
leading us until we saw the decision, but where it was
14
leading is to no consideration of the status quo, and we
15
saw the decision, and no proper application of the
16
analytical tests.
17
So here we are.
18
MS. SPOEL:
19
MS. NOWINA:
Thank you.
I'd like to follow on that question.
I
20
noted the same comment as a question, Mr. Thompson, and the
21
way I noted it was that you said that the law requires IGUA
22
to raise the issue of disqualification to the Board before
23
it can go to appeal.
24
Is that what you were saying?
25
MR. THOMPSON:
No.
No.
I think the law requires me
26
to give you an opportunity, the Board an opportunity, to
27
respond to it.
28
Board.
But if the Board declines, that's up to the
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I submit it would be better from everyone's
2
perspective that there be some response to this.
3
add that of course if a review is granted and it's a review
4
before a different panel, then it seems to me my complaints
5
about the disqualification issue, they may not be
6
obliterated but they're certainly diluted.
7
MS. NOWINA:
8
Mr. Vlahos.
9
MR. VLAHOS:
10
Let me
Thank you.
Thank you, Madam Chair.
Mr. Thompson, on a review, what is your expectation as
11
to how it may roll out?
12
we talking about this Panel identifying or limiting the
13
issues?
14
Are we talking about de novo?
Are
What is your expectation on that?
MR. THOMPSON:
My expectation is it would be a paper
15
review.
It would be as if it were an appeal on these
16
specific errors that we've described.
17
And so in Mr. Leslie's parlance, we would have to
18
demonstrate to the Panel hearing the review that there are
19
these errors in the record; and that if the tribunal
20
agrees, we would put forward our suggested remedies; and
21
others opposite in interest would have alternatives, I'm
22
sure.
23
24
25
26
MR. VLAHOS:
review panel?
The record, then, would be adopted by the
Is that how it would work?
MR. THOMPSON:
That would be my expectation, yes.
But, again, the Board is the master of its own procedure.
27
MR. VLAHOS:
28
MR. THOMPSON:
Right.
Others may have some other views, and
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the Board may respond to them.
2
MR. VLAHOS:
Right.
3
MR. THOMPSON:
4
MR. VLAHOS:
I'm only giving you my expectation.
Now, you broached the notion of a market-
5
based rates regime versus forbearance regime.
6
difference, I think you have said, is in the allocation of
7
the proceeds or the premiums?
8
9
MR. THOMPSON:
The
No, it's taking into account the
revenues, all of the revenues from -- so that the pricing
10
that Union applies -- well, except for some of this in-
11
franchise stuff, but ... wouldn't change.
12
But the revenues that would be realized would be
13
something for the Board to scrutinize.
14
Board would do with those revenues what it thought was
15
appropriate to achieve the objectives that it was concerned
16
about in NGEIR.
17
getting 25 percent of revenues, the Board may say, Well,
18
because these new to storage development risks are greater,
19
we should allocate some more of that to the shareholder.
20
21
22
And the
So that simplistically, where Union was
But it would be transparent.
It wouldn't be a big
mystery.
MR. VLAHOS:
But the tests - we still have the
23
analytical tests of getting there - would not be different,
24
would they, whether one should charge market rates versus
25
forbearance?
26
27
28
MR. VLAHOS:
These analytical tests would be the same,
wouldn't it, to make that determination?
MR. THOMPSON:
No, no.
That's the whole thing.
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Market-based rates, you don't need a workably competitive
2
market.
3
of-service decisions of the Board in the past, they're in
4
this material.
5
value-of-service.
Market-based rates ... and if you read the value-
At tab 1, I think there's some text on
6
What they flow from is there are alternatives.
So,
7
like, electricity is an alternative to gas, or oil is an
8
alternative to gas.
9
set on the basis of the price of oil, and so what happened
In the good old days, some rates were
10
is you then have revenues that have to be -- because it
11
exceeded the cost-to-serve in that particular example I've
12
given, you then have revenues that have to be accounted for
13
in terms of allocating the revenue requirement to other
14
ratepayers and to the shareholders.
15
So what happened, when my clients were subject to oil-
16
based pricing back in the '70s, is that the residential
17
customers were getting -- were getting the benefit of those
18
excess revenues.
19
So the only difference is there is an allocation of
20
the spread between the alternative and the cost-based
21
rates.
22
But to go to forbearance, you don't need any market.
23
You know, all you need is to have an alternative there.
24
But to go to forbearance, what needs to be shown is that
25
there is competition, workable competition, at the
26
transaction point, and that requires the absence of market
27
power, and that could not be established here.
28
MR. VLAHOS:
Okay.
On the secondary market, you've
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heard Mr. Leslie and Mr. Smith and others arguing to the
2
effect - and those are my words - What's the big deal?
3
Board has set out about eight bullet points on page 37 of
4
the decision.
5
the Board references secondary market only in two bullet
6
points, so what's the big deal?
7
If I'm counting correctly, it's eight.
The
And
So in your view, from your earlier comments, it is
8
absolutely critical, the Board's findings or evidence on
9
the secondary market, as opposed to simply relying on the
10
11
primary markets?
MR. THOMPSON:
Well, what was critical was that the
12
Board had to find something was available at Dawn that was
13
competitive with Union Gas's storage service, space,
14
injection, withdrawal, at Dawn.
15
And what the something that the parties fell back on,
16
Mr. Leslie's client and others, were products in the
17
secondary market, because the primary market products -
18
storage from Michigan, plus transportation to Dawn - would
19
be out of the money on a price comparison.
20
So they fell back to the secondary market notion,
21
but -- and I was just trying to find those factors, the
22
bullet points that Mr. Leslie referred to.
23
the decision?
24
But there was no evidence of how much.
Have you got
What was being
25
said was that the product that equated closely to
26
underground storage was delivery/re-delivery service from
27
marketers.
28
assets that they hold.
And marketers provide this with the bundle of
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And there was no evidence as to how much of
2
delivery/re-delivery service was being sold at Dawn.
3
couldn't pick up a publication, for example, and say there
4
were 35 transactions of this at such-and-such a price.
5
There was no evidence as to how much, and there was no
6
evidence of the price.
7
MR. VLAHOS:
Okay.
You
Just finally, if a review is
8
granted, Mr. Thompson, and a decision of the new panel,
9
review panel, confirms the decision, the existing decision,
10
then do I understand that it's still open to you to go to
11
Divisional Court or petition to Cabinet?
12
13
14
MR. THOMPSON:
I'm sorry, I didn't get the first part
of your question, sir.
MR. VLAHOS:
Okay.
If there is a review and the
15
review panel confirms the first decision, then do I take it
16
that it is open to you and other parties to go to
17
Divisional Court or petition Cabinet?
18
MR. THOMPSON:
I'm not so sure I can answer that.
I
19
think what I was suggesting earlier in my submissions was
20
that whatever decision you make on whether to hold a review
21
or not hold a review, I submit that can go further.
22
But if we actually get a review --
23
MR. VLAHOS:
24
MR. THOMPSON:
Right.
-- and the review panel confirms the
25
first decision?
26
answer is, no, we wouldn't.
27
will.
28
From a practical perspective, I think the
We wouldn't go again, if you
I mean, it's not an endless series of challenges.
But as a matter of absolute right, could we assert
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that?
I don't know the answer to that, I'm sorry.
2
MR. VLAHOS:
3
MR. THOMPSON:
All right.
Maybe my learned colleagues --
4
Mr. Warren is very precise on these kinds of matters.
5
might be able to answer that question.
I'm sorry, I can't.
6
MR. VLAHOS:
All right, thank you.
7
MS. NOWINA:
Want to give it a shot, Mr. Warren?
8
MR. WARREN:
I, first of all, want to change the
9
10
“bad”/”good” Thompson.
I think, Mr. Vlahos, the answer to your question on a
11
technical level is probably, yes, that there can be an
12
appeal from an order or decision of the Board, and I
13
think --
14
15
He
MR. VLAHOS:
Mr. Warren, I can't hear you.
Is your
mike on?
16
MR. WARREN:
That's deliberate on my part, sir.
17
I think, Mr. Vlahos, the answer technically, subject
18
to check, is “yes.”
19
from an order or a decision of the Board -- well, actually,
20
I can be somewhat more precise.
21
22
I think that there can be an appeal
"An appeal lies to the Divisional Court" -- I'm
reading from section 33 of your Act:
23
"... from an order of the Board, the making of a rule
24
under section 44, the issuance of a code under
25
section 70.1."
26
So if there is an order of the Board arising out of a
27
review, I assume, subject to check of the case law, that it
28
can be appealed.
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I don't have in front of me the provision dealing with
2
petitions to Cabinet, but I'll assume, for the sake of
3
argument, that you probably could.
4
I think to the point Mr. Thompson makes, whether or
5
not a comprehensive review by the Board would effectively
6
vitiate the grounds for it, I think, is an entirely
7
different matter, and I think the answer to that is
8
probably “yes,” but ...
9
MR. VLAHOS:
Mr. Warren, in the case of a review, do
10
you agree with Mr. Thompson in terms of what it would take
11
by way of a process?
12
MR. WARREN:
Yes, I do, sir.
13
MS. NOWINA:
I have a couple of further questions,
14
15
Mr. Thompson, just short ones for clarification for me.
The analytical steps that you talked about in order to
16
determine whether or not there was a competitive market,
17
did you present those analytical steps or did someone
18
present them in the NGEIR proceeding?
19
of those steps?
20
21
MR. THOMPSON:
Yes.
Was that panel aware
That's my answer.
And if you
want me to get the references, I could --
22
MS. NOWINA:
No, that's good enough for now.
23
MR. THOMPSON:
24
MS. NOWINA:
25
The other question I wanted to ask you was that you
-- try and do that.
We can find the reference.
26
said that there was an error because the decision did not
27
address the arguments brought forward - and I think it was
28
regarding those analytical steps - in the reasons for the
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2
decision.
I just want to confirm that.
Is that what you're saying, that a reviewable error
3
was because they didn't give -- they didn't address those
4
issues in their reasons?
5
MR. THOMPSON:
6
7
Yes.
If there's nothing there, then
the argument is that the arguments were not addressed.
I guess if someone says, Well, since there's nothing
8
there, the arguments must have been rejected; I don't
9
subscribe to that proposition.
10
MS. NOWINA:
11
Mr. Moran.
12
MR. WARREN:
All right, thank you.
Madam Chair, just before Mr. Moran
13
begins, I unfortunately have another obligation.
14
take my daughter to the doctor this afternoon.
15
wondering if I could be excused.
16
here in my place.
17
MS. NOWINA:
18
MR. MORAN:
I have to
I am
Ms. Brousseau will remain
Certainly, Mr. Warren.
Thank you, Madam Chair.
I note the time
19
is a quarter to 3:00, and I don't know if you wanted to
20
take a brief break.
21
is usually the worst part for the court reporter.
22
23
MS. NOWINA:
I know that this time of the afternoon
We'll take 15 minutes.
We'll resume at
3 o'clock.
24
--- Recess taken at 2:44 p.m.
25
--- On resuming at 3:00 p.m.
26
MS. NOWINA:
27
Mr. Moran.
28
REPLY SUBMISSIONS BY MR. MORAN:
Please be seated.
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MR. MORAN:
Thank you, Madam Chair.
2
I have five areas I'd like to address in my reply
3
remarks.
4
Staff yesterday with respect to, at least in principle, the
5
concept of the need to complete the work that needs to be
6
done, in the context of making decisions is something that
7
would fit within the scope of the Board's review power.
8
I also note today that both Enbridge and Union Gas
9
The first one has to do with recognition by Board
agreed with the analysis of Board Staff.
I fully
10
recognize, of course, that Enbridge and Union don't agree,
11
based on the actual motion that we brought forward, that
12
that principle actually applies in the case of the APPrO
13
motion, but at least the principle is there, and there
14
doesn't seem to be any disagreement with respect to that
15
principle.
16
I also want to note that I recognize that Board
17
Staff in its submission did not make comments on the
18
substantive merits of the APPrO motion; it was a question
19
of the applicable principle and does the kind of question
20
that APPrO is raising fit within the review power.
21
That's the first area.
22
The second area is as follows:
During the course of
23
my submissions yesterday, I went to some trouble to
24
separate out the specific issue and isolate the specific
25
issue that's underpinning the motion that the generators
26
have brought forward.
27
of Union Gas, just as assiduously pushed them all back
28
together again to argue that the Board had decided the
This morning Mr. Leslie, on behalf
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2
3
4
issue that we raised.
He took you to a couple of things in the decision, and
I want to just follow him through that process.
He pointed to the fact that the Board had made a
5
decision with respect to the ex-franchise market and the
6
premium and the sharing of the premium.
7
made it clear yesterday that the generators are not
8
pursuing that issue on this motion.
9
10
11
12
And, of course, I
He then took you to the settlement agreement.
If you could just turn up the settlement agreement,
it's in my compendium, Exhibit J1.5, behind tab 6.
He took you to page 9 of the settlement agreement, and
13
he pointed you to the last paragraph on that page, which
14
indicates that:
15
"The parties accept Union's proposal to develop four
16
new ex-franchise services.”
17
And then in brackets:
18
"(Recognizing that it is Union's position that
19
development of” - and it then lists the ex-franchise
20
services - "is contingent on the resolution of the
21
storage pricing issue).”
22
That's true.
And, again, as I indicated yesterday,
23
we're not here to challenge what the Board did with respect
24
to the ex-franchise services.
25
raising on the motion to review.
26
That's not what we're
Then he took you to page 14 of the settlement
27
agreement, under the heading 1.2, and pointed you to the
28
statement in brackets that says:
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"(Complete settlement:
With the exception of Union's
2
proposal to price firm deliverability greater than 1.2
3
percent at market-based rates, the parties agree that
4
the issue of market-based storage pricing is within
5
the ambit of issue number 2, storage regulation, and
6
accordingly, beyond the scope of this settlement)."
7
Again, clearly that's in the settlement agreement, but
8
it's a broader statement than the specific issue that APPrO
9
is raising on its motion.
10
Again, to be crystal clear, the generators are not
11
seeking a review of the Board's decision on the general
12
policy decision to forbear from storage regulation.
13
And I would say this, that the one thing that was
14
obvious by its absence in Union Gas' submissions to you
15
this morning was that Union Gas entirely disregarded the
16
specific issue that the generators seek review on, the
17
specific issue that I set out for you in my submissions
18
yesterday, the specific issue regarding the settlement
19
agreement and the agreement with respect to the allocation
20
methodology, with its two components, the allocation of a
21
certain amount of space, and the right to add
22
deliverability to that space.
23
He made no submissions with respect to that specific
24
issue to determine or to argue that it doesn't fit within
25
the review power.
26
back out again with all the other issues, none of which the
27
generators are pursuing on their motion.
28
Instead, he took it and pushed it all
Then to try and demonstrate that, in fact the Board
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had already decided everything and APPrO is simply
2
rearguing it in front of you, he took you to the decision
3
at page 69.
4
I looked at the passage at page 69, and I have to say
5
that when you look at the passage, in fact, it specifically
6
underlines the problem that APPrO has raised in its motion.
7
It does not resolve the question in the way that Mr. Leslie
8
was suggesting this morning.
9
I'd like you to take a look specifically at the second
10
paragraph under the heading "Board findings" on page 69.
11
In that paragraph the Board finds:
12
"These services are not currently offered.
13
they need to be developed, and investments must be
14
made in order to offer them.
15
conducting open seasons for its new offerings and is
16
committed to providing these services if the Board
17
refrains from regulating them."
18
And that's true.
19
20
Indeed,
Union has been
Union has been offering services in
open seasons.
It's the next sentence that's the key part and the one
21
that gives rise to the whole problem that APPrO has raised
22
in its motion for reconsideration:
23
”The Board concludes that these services are
24
substantially different from the bundled, unbundled,
25
and semi-unbundled distribution services offered by
26
Enbridge and Union."
27
And then it goes on to say that:
28
“There is demand for
these services from marketers ..." et cetera.
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2
3
That's the crux of the matter with respect to the
issue that the generators raise.
And to fully land this issue, I'd ask you to turn to
4
page 56 in the decision.
5
and over on to page 57, this was a paragraph I brought you
6
to yesterday but it's the concluding point with respect to
7
the issue that Mr. Leslie raised to you this morning.
8
9
In the last paragraph on page 56
If you look at the very last sentence on page 56 that
starts with "however," it says:
10
However, the Board finds that customers taking
11
unbundled or semi-unbundled service should have
12
equivalent access to regulated cost-based storage for
13
their reasonable needs."
14
That's what that storage allocation methodology was
15
all about in the settlement agreement, and that's the one
16
thing that this decision does not address.
17
So separate from whatever Union's offering in its open
18
seasons, regardless of whether those open seasons are
19
offering services in-franchise or ex-franchise, separate
20
from the ex-franchise services that Union wants to offer
21
and has been offering, there's this one last issue that has
22
to do with what's in the settlement agreement, and that's
23
not decided anywhere in this decision, and the passages
24
that Mr. Leslie brought you to it just underline the point
25
even more firmly.
26
Mr. Leslie also made a submission about how the
27
marketers were prepared to provide or were providing or are
28
going to provide high deliverability.
I can't remember the
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exact words he used.
2
what took place at the hearing is inconsistent with the
3
evidence that was elicited from the one marketer that
4
actually gave evidence at the hearing, and that was BP.
5
However, that characterization of
I don't want to go through the evidence because there
6
are quite a few pages of it, but I do want you to take a
7
look at volume 13 of the transcript, at pages 66-77, which
8
represents the cross-examination of the BP witness by
9
generator counsel both Mr. Brown and myself.
10
And then Mr. Leslie made a reference to the Greenfield
11
Energy Centre case, which, as the Board will recall, was a
12
facilities case in which Greenfield Energy Centre was
13
seeking leave to construct a pipeline that would provide a
14
direct connection between the power station and the Vector
15
Pipeline.
16
And I think the point that he was trying to make, if I
17
understand it correctly, was that the evidence in that
18
proceeding was inconsistent with the position that the
19
generators were taking in the NGEIR proceeding.
20
The problem that was being addressed in the Greenfield
21
Energy Centre case was that Greenfield Energy Centre could
22
get access to services directly from Vector that it
23
couldn't get from Union.
24
on the record, that Vector could provide through a direct
25
connection to Greenfield was intra-day services, balancing
26
and transportation, and Union couldn't provide that and
27
wouldn't provide it except on the basis of its T1 service,
28
which was much more costly.
And one of the services, which is
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In a nutshell, that was the issue.
And there were
2
other services that could be accessed through a direct
3
connection to the Vector Pipeline.
4
Now, I would have thought that given the bypass issue,
5
that that's not a submission that Union Gas would want to
6
rely on in this proceeding in order to challenge the
7
position that's been taken by the generators, because the
8
generators were seeking services from the distributors in
9
the NGEIR proceeding specifically as part of the overall
10
rationale of that proceeding, which was to come up with
11
services to reduce the requirement to bypass.
12
So I'm a bit confused.
Is Mr. Leslie, on behalf of
13
Union Gas, suggesting that if the generators can't get the
14
services that they need from the distributors through this
15
process, they should just continue to seek bypass
16
facilities?
17
submission that Union wanted to make in this context.
18
I'm not sure that that is really the
So when it comes to getting the intra-day balancing
19
requirements -- services, there was agreement in the NGEIR
20
proceeding that that was going to be made available, and
21
Union Gas and Enbridge came forward to accommodate that
22
intra-day balancing requirement.
23
And one of the things that plays a key role in that
24
intra-day balancing ability is the storage allocation
25
methodology for in-franchise customers as established in
26
the settlement agreement with Union and with its two
27
components, an allocation of space and the ability to add a
28
certain amount of deliverability to that space.
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The next area that I'd like to cover is with respect
2
to a number of issues that relate to the statutory
3
authority of the Board.
4
Mr. Vlahos, you had asked a question, I believe to
5
Board Staff counsel, regarding the appeal period.
6
to follow up on that question.
7
I'd like
And if you could just turn up tab 18 of the Board
8
Staff brief of authorities, tab 18 contains some of the
9
provisions of the Ontario Energy Board Act.
10
And if you go to section 19(2), 19(2) indicates that:
11
"The Board shall make any determination in a
12
proceeding by order."
13
And then if you go to section 33 of the Act, which was
14
on that single sheet of paper that was part of the package
15
that Mr. Warren handed up earlier this afternoon,
16
section 33(1) says that:
17
"An appeal lies to the Divisional Court from:
18
“(a) an order of the Board."
19
So we have the NGEIR decision, but there is no NGEIR
20
21
order yet.
Now, while I'm on section 19, I also want to follow up
22
on Enbridge's submission this morning on the point
23
regarding the use of the word "rehearing", as it used to be
24
in the original rule for review and then is no longer in
25
the new rule.
26
And his argument, as I understand it, was that by the
27
removal of the word "rehear", that the Board no longer had
28
the ability to rehear as part of its review authority.
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And I must profess that I'm not sure how that point
2
follows when you consider other statutory provisions in the
3
statute.
4
If you look at sections 19(1), it says that:
5
"The Board has, in all matters within its
6
jurisdiction, authority to hear and determine all
7
questions of law and of fact."
8
So, ultimately, if the Board proceeds with a review
9
motion, that's a proceeding, and if there are questions of
10
fact or questions of law that have to be addressed, the
11
Board has the statutory jurisdiction to hear them.
12
Now, it may be that for the Board's purposes it needs
13
to rehear some of the evidence or wants to follow up on
14
some of the original evidence or it needs to hear some new
15
evidence.
16
what "authority to hear and determine all questions of law
17
and fact" means, and it cannot mean anything else.
18
The Board has that flexibility, because that's
It would be a hollow power if you could not do what
19
you need to do to get what you need on the record to make a
20
decision in a review motion just because of the removal of
21
the word "rehear" from the rules.
22
The fourth area that I'd like to address is with
23
respect to other submissions by Enbridge.
24
you to the Enbridge settlement agreement, and if you turn
25
to tab 7 of my compendium, on the first page, which is
26
page 23 of 34 from the settlement agreement, he brought
27
your attention to the bottom of the page, (a):
28
Mr. Cass brought
"The allocation methodology for gas-fired generators'
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entitlement to cost-based standard storage at 1.2
2
percent deliverability is also premised on the
3
following:
4
“(a) The storage space requirement to meet gas-fired
5
generators' intra-day balancing needs is based on the
6
assumption that high-deliverability storage is
7
available to those customers in the market."
8
Now, he tried to suggest that that meant that there is
9
a big market for intra-day balancing services and that
10
somehow, as a result of this paragraph, that the generators
11
had conceded that point.
12
Nothing could be further from the truth.
The reality
13
is that this provision is in the context of the reality
14
that Enbridge, unlike Union, does not meet the balancing
15
needs of its in-franchise customers 100 percent through its
16
own assets and, by necessity, has been contracting with
17
Union Gas in order to fully meet the balancing requirements
18
of its in-franchise customers.
19
statement.
That's the context for that
20
And Mr. Cass then went on to say, And we don't know
21
what all the fuss is about, because Enbridge made a very
22
clear commitment with respect to this service that the
23
generators were seeking.
24
And he brought you to page 70 of the decision, the
25
NGEIR decision, and I'd like to bring you to what he showed
26
you.
27
28
In the second paragraph on page 70 -- the first full
paragraph - I'm sorry - it states that:
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"The Board does have a duty to protect the interests
2
of consumers using these services with respect to
3
price and reliability and quality of service.
4
context, we find that the crucial factor is the
5
availability of the service itself; namely, its
6
reliability and quality."
7
And then this is the point that Mr. Cass emphasized:
8
"The Board notes that Enbridge committed to offer
9
Rate 316, whether or not the Tecumseh enhancement
In this
10
project goes ahead, and to price it on a cost
11
pass-through basis.
12
fulfill this commitment."
13
So Mr. Cass says, We made the commitment and the Board
14
noted the commitment.
The Board expects Enbridge to
So what's the fuss?
15
Well, if that's the case, then it seems to me that
16
today, now that you've heard from Enbridge, you're in a
17
position to dispose of at least part of APPrO's motion and
18
grant the motion to review with respect to our question as
19
far as it relates to Enbridge, issue an order requiring
20
them to do what's reflected in what the Board expects them
21
to do, and have it show up in the tariff, have the draft
22
tariff circulated for comment in the normal course.
23
So today I would ask that the Board grant that relief,
24
at least with respect to Enbridge.
25
question with respect to the Union settlement agreement and
26
the storage methodology in that, but it seems that we no
27
longer have an open question with respect to Enbridge.
28
MR. VLAHOS:
We still have an open
Mr. Moran, by "today" you mean as a
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result of this threshold proceeding?
2
by "today"?
3
MR. MORAN:
4
MR. VLAHOS:
5
MR. MORAN:
Or what do you mean
Today, in this room.
Oh, in this room.
As part of this process, Enbridge has
6
reaffirmed a commitment the Board has stated in its
7
decision, and there should be no barrier to an order being
8
issued with respect to the obligation to provide Rate 316
9
on a cost pass-through basis.
10
That's what the Board expects them to do, and that's
11
what the order to Enbridge should reflect.
It has nothing
12
to do with forbearance anymore.
13
clearly, an expectation that Enbridge will follow through
14
with its commitment to offer Rate 316 on a cost pass-
15
through basis.
16
MR. CASS:
We're talking about,
For clarity, Madam Chair, Mr. Moran just
17
said this has nothing to do with forbearance.
I did take
18
the Board to a paragraph two paragraphs down on the same
19
page, which is page 70, where the Board specifically said
20
it was forbearing in respect of this service.
21
how Mr. Moran can go from that to say that there should be
22
some form of an order when there's been a determination
23
that the Board will forbear.
I don't know
24
MS. NOWINA:
25
Mr. Moran, apologies for stopping you in mid-flow, but
26
You anticipated my question, Mr. Cass.
I'd like to understand this myself.
27
The second paragraph on that page says that Enbridge
28
has made the commitment, which you've confirmed here, and
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that the Board expects you to meet that commitment.
2
second-last paragraph says that the Board is going to
3
forbear.
4
The
How do you put those two things together?
I guess the only way I could put them together was to
5
assume that the Board was forbearing; it was not going to
6
set it as a rate in their rate schedules, but still
7
expected Enbridge to give that pricing to the generators.
8
Is that what it means, Mr. Cass, Mr. Moran?
9
MR. CASS:
My understanding, Madam Chair, is the
10
Board's expectation is that Enbridge will fulfill this
11
commitment in respect of a service that's essentially an
12
unregulated service.
13
MS. NOWINA:
14
MR. CASS:
15
16
17
MS. NOWINA:
But it will not regulate it; it is not
part of your regulated rate schedule.
MR. CASS:
19
MS. NOWINA:
21
And that Enbridge intends to fulfill the
commitment.
18
20
But it will not --
That's correct.
Is that your understanding of the impact
of this?
MR. MORAN:
I think that what you've heard simply
22
underlines the difficulty that the generators find
23
themselves in, because if this service is supposed to be
24
provided, then it seems to me that that's a basis for
25
regulation.
26
If it's not supposed to be, if it's just something
27
you're supposed to compete for, and if you can get it if
28
you're lucky and you can out-compete somebody, well, that's
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2
3
4
a different kind of proposition.
Those two statements do not stand beside one another
and fit.
They just don't.
On the Enbridge side, that's the problem we have.
And
5
on the Union side, the problem we have is the storage
6
allocation methodology in the settlement agreement also not
7
reflected in the decision.
8
9
10
11
MS. NOWINA:
matter?
Can I ask one more question on this
I'll address it to you, Mr. Moran.
If Mr. Cass
wants to jump in, that's fine.
This expectation that Enbridge will make the offer,
12
according to this paragraph, is there a term to that
13
expectation?
14
How long does that expectation live?
MR. MORAN:
From the generators' perspective, if
15
there's a utility service that's required by generators,
16
then the utility is obligated to provide it.
17
the statute says.
18
that the customer can apply to the Board and the Board can
19
order them to provide it.
20
21
22
23
24
That's what
And if they don't, the statute also says
That's the regulatory framework that we operate in for
utility services.
MS. NOWINA:
In terms of the meaning of that
paragraph, is that how you would read that paragraph?
MR. MORAN:
Based on the methodology for the storage
25
allocation which was to achieve the same principles that
26
the Union settlement did but recognize the reality that
27
Enbridge would have to get some of the balancing service
28
elsewhere, absolutely.
It's a utility service that an in-
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franchise customer is entitled to get and which the Board
2
at page 56 said should continue; that the reasonable needs
3
for storage services for in-franchise customers, whether
4
they're bundled, semi-bundled or unbundled, should
5
continue.
6
That's the context that we are operating in, and so,
7
yes, we say it's a utility service, and it should be
8
provided.
9
10
MS. NOWINA:
MR. CASS:
Do you have anything to add, Mr. Cass?
First of all, of course that was what
11
Mr. Moran argued to the Panel before, and he didn't succeed
12
on that argument.
13
But your question, Madam Chair, I think, had to do
14
with the term.
15
commitment by Enbridge is described in the argument in-
16
chief that's at tab 14 of the Enbridge brief.
17
qualification on the term described in this commitment in
18
the argument in-chief is at page 31 of 35.
19
I did indicate to the Board that the
The only
At the bottom of page 31, the company did describe the
20
constraints it would be under in terms of renewal or
21
rollover of one of these contracts.
22
I'll just read the sentence:
23
"Given that the company will have to acquire the
24
services to offer Rate 316 in the marketplace, the
25
company is not able to make any commitment to
26
automatic renewal (or rollover) rights for Rate 316,
27
since the contracts for these services will be for
28
fixed terms and the competitive market price in terms
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that the company will commit to for these services
2
will likely change from time to time.
3
does believe, however, that upon the expiry of a
4
Rate 316 contract, it will be able to enter into a new
5
Rate 316 contract with an interested customer."
6
That was the only limitation on term, was that concern
The company
7
about what would happen if there was an expectation of an
8
automatic renewal or a rollover.
9
MS. NOWINA:
Thank you.
That answers my question.
10
Go ahead, Mr. Moran.
11
MR. MORAN:
12
And ultimately, to follow up on that, if Enbridge is
Thank you, Madam Chair.
13
unable to contract for a particular kind of service to meet
14
that intra-day requirement which the Board has established
15
is needed, then the next question would be:
16
is it going to be met?
17
with it at that time.
18
Well, then how
One would presumably have to deal
As I say, it's a utility service that the Board has
19
said ought to be extended to the generators to meet their
20
clearly defined operational needs.
21
all about.
22
That's what this was
So this is, I think, demonstrative, Madam Chair, of
23
the implementation issues and the need for further
24
conversation by the Board with respect to how this is all
25
supposed to work.
26
There are unanswered questions that the Board needs to
27
wrestle with on these issues, and that's why the generators
28
have brought forward their motion to review.
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The last area, then, addresses the submissions that
2
you've heard with respect to the interpretation of the
3
review power rule of procedure which the Board has in its
4
Rules of Procedure.
5
I have to say at this point, Madam Chair, to some
6
extent, particularly when you consider the approach that
7
was taken by Board Staff and endorsed by Union Gas and
8
Enbridge, that the tail seems to be wagging the dog.
9
don't start with a procedural rule to figure out what your
You
10
jurisdiction is.
11
your way down, and so, if you have the jurisdiction, you
12
proceed on the basis of the jurisdiction you have, from the
13
statutes, from the SPPA, from the Ontario Energy Board Act,
14
as the case may be, and the Electricity Act, as the case
15
may be.
16
your jurisdiction is defined.
17
statutes.
18
You start with the statute and you work
You don't start with the rule.
That's not where
It's defined in the
Tribunals are clearly creatures of statute.
You've heard all sorts of submissions about enumerated
19
grounds.
20
You've heard submissions about there should be broad
21
interpretation of the rule, there should be narrow
22
interpretation of the rule.
23
We're not in court looking at fundamental human rights set
24
out in a charter, but it's beginning to sound like that.
25
You've heard submissions about analogous grounds.
This is not a charter case.
The Board is not a court.
What it is is an expert
26
tribunal that's charged with administering the Ontario
27
Energy Board Act and the Electricity Act.
28
been really, really clear, Madam Chair, that a tribunal is
The courts have
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different from a court.
And the Russell decision is a
2
specific iteration of that principle, in the specific
3
context that you're dealing with, which is your review
4
power.
5
that makes you a tribunal.
It's broad and it's an important part of what it is
6
Not only that, but, again, everybody focussed on
7
section 25 in the SPPA and the provisions in the SPPA that
8
give rise to the review power, but if you're going to be
9
looking at the SPPA, you have to also look at other
10
11
12
provisions of the SPPA.
And section 2 of the SPPA provides direct guidance to
you on the issue that's before you today:
13
"This Act, and any rule made by a tribunal under
14
section 17.1(4) or section 25.1" - which is the one
15
that's been referred to a lot - "shall be liberally
16
construed to secure the just, most expeditious and
17
cost-effective determination of every proceeding on
18
its merits."
19
So that's the philosophy behind the SPPA, as set out
20
21
in section 2 of the SPPA.
But not only that, the Board's own rules specifically
22
adopt that principle, and if you go to rule 2 of the
23
Board's rules, rule 2.01 says:
24
"These rules shall be liberally construed in the
25
public interest to deliver the most just, expeditious,
26
and efficient determination on the merits of every
27
proceeding before the Board."
28
So you've heard moving parties say “liberal
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construction”.
You've heard responding parties say “narrow
2
construction”.
The one coherent principle that you can
3
extract from all of the review decisions is this:
4
matter who the moving party is, whether it is utilities -
5
and they've been the moving party many times - or other
6
intervenors - and they have been moving parties on various
7
things - the one thing that moving parties are always going
8
to argue is liberal construction.
9
responding parties are - and sometimes it's been the
No
And no matter who the
10
utilities and sometimes it's been intervenors - they're
11
always going to argue for a narrow interpretation.
12
But that's all smoke and mirrors, Madam Chair.
At the
13
end of the day, all that matters is:
14
that's raised on the motion for review a serious question
15
that deserves the attention of the Board?
16
answer to that is yes, then you should carry on and deal
17
with the merits of that question.
18
Is the question
And if the
And there are numerous examples in the previous
19
decisions on motion reviews where the Board basically took
20
that approach time after time after time.
21
the question, and then they decided that they would deal
22
with that question.
23
They focussed on
And in the context of the issue that we have raised in
24
the APPrO motion, it's a legitimate question.
25
serious question.
26
record clearly demonstrates that it's a real question.
It's a real question.
It's a
Madam Chair, the
27
And I would conclude by saying that if you turn up
28
page 15, at tab 13 of the Board Staff authorities - tab 13,
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one of the motions to vary, at page 15 - ultimately you've
2
got the principle that really is the only important one in
3
the context, at least, of the APPrO motion, and it's this:
4
"The Board agrees with parties ..."
5
Just to set the stage, this was a motion that was
6
brought forward in the context of the Union Gas PDR regime
7
which had been imposed, and it was the first time that the
8
Board had really sort of wrestled with performance-based
9
regulation in the manner in which it did with respect to
10
Union Gas.
So:
11
"The Board agrees with parties that the Board has wide
12
discretion with regard to whether or not to review a
13
matter that is the subject of a Board decision.
14
Board is also mindful of the concern that for
15
efficiency of the regulatory process, the power and
16
discretion to review should be exercised with
17
caution."
18
APPrO does not disagree with any of those principles.
19
The
However:
20
"The Board is of the view that Union's motion has met
21
the threshold test on the grounds that an important
22
issue has been raised.
23
review of the issues raised in the motion is
24
appropriate not entirely because of the strength of
25
Union's arguments, but also because the matter raises
26
issues associated with the implementation of a new
27
regulatory regime involving the development of a PBR
28
mechanism and the establishment of appropriate-based
The Board believes that a
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data for setting rates under the PBR mechanism."
2
And that's where APPrO is.
That's where the gas-fired
3
generators are with respect to the issue of storage
4
services.
5
regulatory regime.
6
change, and there are some specific and important
7
implementation issues that need to be wrestled with.
8
9
There are important -- this is an important new
The decision to forbear is a dramatic
Gas-fired generators are coming to the province to
help meet the province's electricity needs.
They have a
10
clearly demonstrated operational need for intra-day
11
balancing, and they need to be able to get access to the
12
services that they convinced the Board were important and
13
which they bargained for in the settlement agreement, as
14
you can see in the Union settlement agreement.
15
And on that basis, Madam Chair, I would submit that it
16
is appropriate for APPrO's motion to be heard on its
17
merits, it ought to be heard, and that you should order
18
accordingly.
19
MS. NOWINA:
Thank you, Mr. Moran.
20
QUESTIONS BY THE BOARD:
21
MR. VLAHOS:
Mr. Moran, I noted from your argument
22
that every service the utility must provide - and you're
23
arguing that the decision says that, in terms of the
24
intra-day balancing - must have a regulated price.
25
correct in my overall assessment of what you said?
26
MR. MORAN:
No, Mr. Chair.
Am I
In fact, you've asked a
27
very important question, because, again, I want to be at
28
great pains to emphasize.
APPrO -- the gas-fired
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generators are not asking you to review the general
2
decision to forbear from storage regulation.
3
asking you to review the pricing for the new ex-franchise
4
services.
5
happen in-franchise.
6
They're not
They're not even asking you to review what may
It's even narrower than that.
It's the specific issue
7
of the space allocation methodology with the right to add
8
deliverability to that space which is allocated by that
9
methodology, nothing more than that, and for that
10
particular service, that is a cost-based service, because
11
it's utility space with utility deliverability added to it.
12
It's not available in the marketplace.
You can't go
13
somewhere else to increase the deliverability of the space
14
that you're --
15
MR. VLAHOS:
I understand that, but you heard Mr. Cass
16
saying, Well, the Board also said that there's forbearance
17
on this, and, therefore, is the decision also
18
contradictory?
19
MR. MORAN:
That's my question.
Well, that's certainly the position that
20
the utilities are taking, and clearly APPrO is saying, I
21
don't see that in the decision.
22
saying that it's the other way in the decision; we just
23
don't see it in the decision at all.
24
The question is:
And, in fact, we're not
For that specific component of the
25
settlement agreement, where did the Board say specifically
26
that you can be allocated space -- and, yes, there's a
27
right to increase the deliverability of that space, but
28
somehow, in some undefined way, the pricing of that
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deliverability for that space is somehow out there in the
2
marketplace at market prices.
3
It's not logically possible to conclude that, and we
4
say that the Board never actually did conclude that and
5
that the Board needs to examine that specific issue.
6
7
8
9
MR. VLAHOS:
Well, maybe not -- the Board did not
consider that, is that -MR. MORAN:
Maybe didn't consider the nuance or at
that level of detail.
Maybe there is some detail still to
10
be filled in.
Whatever way you want to characterize it,
11
the Board did not land on that issue in any way whatsoever.
12
It's not a question of whether the generators are
13
unhappy about the decision.
We'd just like to have a
14
decision to figure out if we are unhappy or not, and we
15
don't know if we are unhappy or not at this point.
16
There's a number of good things in the decision with
17
respect to the provision of new services and flowing from
18
the settlement agreement, and that process worked, and we
19
say that there's a little bit more work to be done.
20
21
22
MR. VLAHOS:
You think that you are owed a rate, and
Enbridge says you are not owed a rate?
MR. MORAN:
On the very -- on the narrow question of
23
Rate 316, they've said that it's a cost pass-through.
24
Well, that sounds like a rate.
25
But the larger question is -- you know, there's
26
fundamental disagreement on what this means in context of
27
Rate 316, and there's an even more fundamental disagreement
28
with respect to what the Board did, if anything at all, on
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2
the narrow question of the Union settlement agreement.
MR. VLAHOS:
All right.
And let's leave it on the
3
basis that this is a pretty narrow question, because I was
4
still going back to my original question of:
5
service by a utility that must be provided, does it have to
6
have a regulated rate?
7
of, What is forbearance all about?
Does every
Because that brings us to the issue
8
And in the event the Board found that it should
9
forbear from all storage activity, not just a portion of
10
it, then does it mean that there is still an obligation to
11
serve by the utility in terms of storage?
12
it's going maybe as to --
13
MR. MORAN:
That's where
Well, I take your question, Mr. Vlahos.
14
Absolutely, there's still an obligation to serve,
15
ultimately, because just because there's forbearance on the
16
rates doesn't mean that there isn't an obligation to serve,
17
and that has to continue.
18
And the issue of forbearance is driven by
19
considerations of whether the price has to be set through a
20
rate-making process, but it doesn't take away the
21
requirement to serve.
22
process is going to take the position that there's no
23
obligation to provide distribution services, whether
24
they're regulated or unregulated, from a rate-making
25
perspective.
And I don't think anybody in this
26
If that's the case, then I think we have an even
27
bigger problem on our hands, because the in-franchise
28
customers are in the hands of a monopoly provider, who
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presumably is not going to say, We're not going to provide
2
you the service you need.
3
MR. VLAHOS:
4
MR. MORAN:
Thank you, sir.
There was one minor little detail,
5
Madam Chair, and that was in the spirit of the additional
6
motions to vary that were being brought forward, and the
7
one that was brought forward regarding Oakville.
8
two more that I know of that you may want to take a look
9
at.
There are
There's the PowerStream 2006 rates case, where there
10
was a motion to vary, and there was Enersource Hydro
11
Mississauga, where there was a motion to vary.
12
bit more about the Enersource one than the PowerStream one,
13
but you may want to take a look at those.
14
I know a
In the Enersource one, the issue there was that the
15
Board made a decision on rates, and indicated that it
16
didn't have sufficient evidence to grant a particular item
17
that Enersource was seeking.
18
forward a motion to vary, bringing in additional evidence
19
and then asking the Board to grant the original request,
20
which the Board ultimately did.
21
And Enersource then brought
Just in the interests of the completeness of the
22
record, there are two more motions to vary decisions
23
available to you.
24
MS. NOWINA:
25
Mr. Rider.
26
REPLY SUBMISSIONS BY MR. RYDER:
27
MR. RYDER:
28
Thank you, Mr. Moran.
I have three points in reply.
is on the threshold test.
The first
The second is the application of
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the Russell decision to your review how powers.
2
I would like to rebut the argument of Mr. Leslie as he
3
spoke against Kitchener motion.
4
The third,
With respect to the threshold test, after listening to
5
the arguments of the respondents, it seems to me that the
6
question of whether the Board should take a narrow
7
approach, as argued by the respondents, or a broader
8
approach, as argued by the applicants, depends on the
9
nature of the case under review.
10
11
Here it really depends on
how you would characterize the NGEIR case.
And the position, I think, of the respondents is no
12
doubt appropriate if you consider that the NGEIR decision
13
is not unlike an ordinary rates case without long-term
14
impacts on consumers or if it's a case with issues that
15
could be revisited in the near future.
16
next rate case.
For example, the
17
If you see NGEIR as that kind of case, then the
18
factors of finality and expedition and the need to exclude
19
re-arguments by unhappy parties, those factors would
20
prevail in your deliberations.
21
But I submit that you should recognize NGEIR as a
22
different type of case entirely.
23
case where a utility or an intervenor is momentarily upset.
24
And after all, Kitchener has been an intervenor in cases at
25
this Board since the mid-1970s, and I can tell you, it
26
knows how to handle disappointment without seeking a
27
review.
28
This isn't like a rate
I submit this is a case which will have a long-lasting
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and significant consequence for the Ontario public
2
interest.
3
the representatives of consumers in Ontario are applicants
4
before you.
5
I submit, is because the interests of the Ontario consumer
6
are so heavily engaged.
That's why I think virtually all, almost all, of
That has to be unprecedented.
And the reason,
7
So this is a case, I suggest, where it is more
8
important to get it right than to achieve immediate
9
expedition and finality.
In that sense, it's not unlike
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the Oakville Hydro case, where the Board granted a review
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to change the decision.
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If you see NGEIR as affecting the long-term interests
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of the Ontario consumer, then I submit that the broader
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approach urged on you by the applicants is the more
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appropriate approach.
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Now let me turn to the Russell decision.
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I understood that Mr. Thomson for Board Staff argued
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that it was inapplicable to this Board because the
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statutory source of your review power is different from
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that of the OMB's.
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bear scrutiny.
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And I submit that that argument doesn't
This Board’s source is section 21(2) of the Statutory
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Powers Procedures Act.
The OMB source is section 43 of the
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OMB act.
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that they both provide an equally broad power of review.
If you read these two provisions, you will see
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The fact that the source of this Board's power to
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review is in a different act doesn't mean that the Russell
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decision is inapplicable.
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I think the application of Russell is also confirmed
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by implication by the Oakville Hydro case.
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Mr. Akman and Board Staff should be commended for bringing
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it to our attention.
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And I think
My final point deals with Mr. Leslie's arguments,
which address the Kitchener motion.
My main point here is that -- no, sorry.
Mr. Leslie's
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main point was that the Board didn't misunderstand the
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evidence and didn't misunderstand the argument, but the
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point that should be made, and that I wish to leave with
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you, is that, apart from Mr. Leslie's general observations
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that the Board didn't misunderstand anything and didn't
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misunderstand the evidence, he didn't answer the actual
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points that are asserted in my motion.
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So, for example, he didn't answer the point that the
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Board ignored the evidence that aggregate excess was
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insufficient for Kitchener; and that the Board instead
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relied on or recited evidence relating to the sufficiency
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of a different allocation entirely, the contractual
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allocation, which is 10 point percentages higher than
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aggregate excess.
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And with respect to the storage allocation problems
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for all of Union's in-franchise problems, he didn't address
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the fact that aggregate excess doesn't cover load-balancing
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from March 31, because aggregate excess is exhausted by
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March 31.
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So instead of answering these specific points, what he
did was read to you portions of the Board's decision
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between pages 94 and 96.
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Two points are striking with respect to those pages.
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The first is that they seem reveal that the Board
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considered the reserve for March 31st for load-balancing in
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April to be a requirement for colder-than-normal weather, a
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feature of a colder-than-normal winter; whereas, we all
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know that the March 31 reserve is a requirement for all
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years.
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on a colder winter.
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year.
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year.
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Year-in, year-out.
It's not something that depends
You have to have it there for every
It's a planned requirement that's in place for every
The second point that arises from these passages in
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the Board's decision, this is from page 96, when Mr. Leslie
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read the passage in which the Board says that the issue for
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Kitchener is whether the storage method for it should be
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unique, should be different.
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all.
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The real issue is:
And that's not the issue at
What method meets the reasonable
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load-balancing requirements of Kitchener?
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unique claim.
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On a smaller scale, Kitchener's needs for load-balancing
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are exactly the same as Union.
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1 and we need coverage from March 31.
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aggregate excess is that it doesn't do either.
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do it for Union, and it doesn't do it for Kitchener.
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That's not a
We need coverage from March
The problem with
It doesn't
So in reply, the point I wish to leave with you is
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that no one has suggested that these points that I've
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raised, these problems with the Board decision, are
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invalid; and that's true for the aggregate excess method,
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and it's also true for that part of the Board's decision
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that places a cap on the amount of cost-based storage
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reserved for in-franchise.
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Those are my reply submissions.
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MS. NOWINA:
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QUESTIONS BY THE BOARD:
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MR. VLAHOS:
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Thank you.
Thank you, Mr. Ryder.
Mr. Ryder, just a general question, not
specific to the relief you're seeking.
Quite often we have
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been told, and we practice, that the rules are just a
11
guideline, our rules, the Board's rules.
12
fact that the motion-to-review provisions in our rules have
13
a genesis in the Statutory Powers Procedure Act, should we
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have a different standard when we read the words in those
15
rules, or should we still view it as guidelines?
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MR. RYDER:
By virtue of the
Well, I think that you should view them as
17
a guideline because of the word "may".
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you say that -- the rule says that "the grounds may include
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the following."
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I adopt, those are indicative of the grounds that you may
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consider.
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MR. VLAHOS:
In your own rule,
And for the argument of Mr. Warren, which
So nothing turns on my question.
As long
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as the word "may" is in there, then nothing turns on my
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question, you say?
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MR. RYDER:
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MR. VLAHOS:
All right.
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MS. NOWINA:
If there are no further matters, that
28
Right.
Thank you very much.
concludes this oral proceeding.
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Thank you, everyone, for your attention to the
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schedule and for your submissions.
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reporter.
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Thank you to the court
And we will consider these matters and get a decision
to you as soon as possible.
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We're now adjourned.
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--- Whereupon the hearing adjourned at 3:54 p.m.
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