· web viewin answering the question -- and once again, these are the planning criteria that you...

ONTARIOENERGYBOARD

FILE NO.: EB-2007-0707

VOLUME:

DATE:

BEFORE:

2

September 9, 2008

Pamela Nowina

Ken Quesnelle

David Balsillie

Presiding Member

Member

Member

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EB-2007-0707

THE ONTARIO ENERGY BOARD

IN THE MATTER OF Sections 25.30 and 25.31 of the Electricity Act, 1998;

AND IN THE MATTER OF an Application by the Ontario Power Authority for review and approval of the Integrated Power System Plan and proposed procurement processes.

Hearing held at 2300 Yonge Street,25th Floor, Toronto, Ontario,on Tuesday, September 9, 2008,

commencing at 9:02 a.m.

------------------VOLUME 2

------------------

B E F O R E:

PAMELA NOWINA PRESIDING MEMBER

KEN QUESNELLE MEMBER

DAVID BALSILLIE MEMBER

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A P P E A R A N C E S

JENNIFER LEA Board CounselDAVID CROCKER

DAVID RICHMOND Board StaffVIOLET BINETTENEIL McKAY

GEORGE VEGH Ontario Power Authority (OPA)MICHAEL LYLEGLEN ZACHERJAMES HARBELLKRISTYN ANNIS

STEVEN SHRYBMAN Council of Canadians

JAY SHEPHERD School Energy Coalition (SEC)JOHN DeVELLIS

DAVID POCH Green Energy Coalition, PembinaKAI MILLYARD Foundation and Ontario Sustainable

Energy Association (OSEA)

ANDREW LOKAN Power Workers' Union (PWU)JUDY KWIKRICHARD STEPHENSON

BASIL ALEXANDER Pollution ProbeMURRAY KLIPPENSTEINCORY WANLESSKENT ELSON

TOM BRETT Association of Power Producers ofCARLTON MATHIAS Ontario (APPrO)

PETER THOMPSON Canadian Manufacturers & ExportersVINCE DeROSE (CME)NADIA EFFENDI

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MARK RODGER Alliance of Energy Consumers (Association of Major Power Consumers of Ontario, AMPCO; Canadian Chemical Producers' Association; Cement Association of Canada (Ontario); Industrial Gas Users Association, IGUA; Ontario Federation of Agriculture, OFA; Ontario Forest Industry Association; Ontario Mining Association; Stone, Sand and Gravel Association of Ontario

IAN MONDROW City of TorontoELISABETH DeMARCO

MICHAEL BUONAGURO Vulnerable Energy Consumers' Coalition (VECC)

JOHN CYR City of Thunder Bay, NorthwesternNICK MELCHIORRE Ontario Municipal Association

(NOMA), Town of Atikokan

ROBERT WARREN Consumers Council of Canada

KELLY FRIEDMAN Electricity DistributorsRAUL AGARWAL Association

JOHN RATTRAY Independent Electricity SystemPAULA LUKAN Operator (IESO)

TIM MURPHY Canadian Solar IndustriesAMANDA KLEIN Association

CHARLES KEIZER Brookfield Energy Marketing Inc., Great Lakes Power Ltd. (GLPL)

DOUG CUNNINGHAM Nishnawbe Aski Nation

ALEX MONEM Saugeen Ojibway Nations (SON)ARTHUR PAPE

PETER FAYE Lake Ontario WaterkeeperJOANNA BULL

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JENNIFER AGNOLIN NorthwatchVIVIENNE BALL

JEFF ROSEKAT First Nations Energy AllianceCHERIE BRANTGENEVIEVE LE COMTE

JIM HAYES Society of Energy ProfessionalsJO-ANNE PICKEL

SARAH DOVER Provincial Council of Women of Ontario (PCWO)

MICHAEL ENGELBERG Hydro One Networks Inc. (HONI)BLAIR McDONALD

DAVID GOURLAY Newfoundland and Labrador Hydro

DAVID STEVENS Enbridge Gas DistributionDENNIS O'LEARY

PAUL MANNING National Chiefs Office, Assembly of First Nations

FRED CASS Ontario Power Generation (OPG)

ANDREW TAYLOR Ontario Waterpower Association, Canadian Wind Energy Association

DAVID MacINTOSH Energy Probe

ALSO PRESENT:

Dr. JAN CARR Ontario Power AuthorityMIRIAM HEINZ

TOM ADAMS Alliance of Energy Consumers

CHRIS BUCKLER Electricity Distributors' Association

GRACIA JANES Provincial Council of Women of Ontario

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I N D E X O F P R O C E E D I N G S

Description Page No.

--- Upon commencing at 9:02 a.m. 1

Preliminary matters 1

ONTARIO POWER AUTHORITY - PANEL 2, RESUMED 6

A. Shalaby, A. Pietrewicz, Previously Sworn

Continued cross-examination by Ms. Lea 6Cross-examination by Mr. Crocker 8

--- Recess taken at 10:25 a.m. 49--- On resuming at 10:45 a.m. 49

Procedural matters: 59

Cross-examination by Mr. Poch 66

--- Luncheon recess taken at 12:14 p.m. 101--- Upon resuming at 1:47 p.m. 101

--- Recess taken at 3:12 p.m. 152--- On resuming at 3:30 p.m. 152

Procedural matters 190

--- Whereupon hearing adjourned at 4:40 p.m. 192

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E X H I B I T S

Description _______Page No.

EXHIBIT K1.3: BOARD STAFF CHART. 1

EXHIBIT NO. K2.1: GEC CROSS-EXAMINATION MATERIALS FOR PLAN DEVELOPMENT 65

EXHIBIT NO. K2.2: LIST OF DIRECTIVE AND LETTERS 66

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U N D E R T A K I N G S

Description Page No.

UNDERTAKING NO. J2.1: TO PROVIDE A LIST OF EXISTING DIRECTIVES THAT AUTHORIZE CONSERVATION PROCUREMENT 77

UNDERTAKING NO. J2.2: TO PROVIDE AVOIDABLE PLANNED CAPACITY AS IS PRESENTED IN DRAFT FORM IN K2.1, PAGE 1121

UNDERTAKING NO. J2.3: TO PROVIDE COMPARATIVE SAFETY STATISTICS FOR ENERGY PRODUCTION FOR ELECTRICITY GENERATION DOCUMENT 155

NO

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Tuesday, September 9, 2008

--- Upon commencing at 9:02 a.m.

MS. NOWINA: Please be seated.

Good morning, everyone. Today is day 2 of the oral

portion of the review of the Integrated Power System Plan,

the IPSP. The Ontario Power Authority is seeking the

Board's approval of the Integrated Power System Plan and

certain procurement processes. The Board has assigned file

number EB-2007-0707 to this application.

Today we continue with the cross-examination of

panel 2 on plan overview and development.

Now, those of you who were here yesterday will notice

that we have moved the witness panel to my left and Board

Staff has moved to the right. That's with the feeling that

the mikes on this side may not be quite as strong as the

mikes on the other side. However, I would ask the witness

panel to please speak up, use your loudest voice for us.

It's very important that you be heard, both here and in the

other room and over the Internet.

Are there any preliminary matters?

PRELIMINARY MATTERS:

MS. LEA: I have a very minor matter, Madam Chair, of

an administrative nature. Those folk who are receiving the

transcript, Exhibit K1.3 made it into the record yesterday.

That was the Board Staff chart, but it didn't make it into

the index of the transcript. So I would ask that that minor

correction be made, please.

EXHIBIT K1.3: BOARD STAFF CHART.

ASAP Reporting Services Inc.(613) 564-2727 (416) 861-8720

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MS. NOWINA: All right. We will do that. Any other

preliminary matters?

MR. VEGH: I have one, Madam Chair.

I provided Ms. Lea with the copies of materials that I

wanted to speak to this morning, as well as I provided

counsel for NOMA with the materials, because it does address

the NOMA issues. I don't know if you have the materials

with you.

--- Ms. Lea passes documents to Board Members.

MR. VEGH: I don't plan to go through these materials

in detail, but they lay out the correspondence between

myself and counsel for NOMA.

The preliminary matter that I am addressing has to do

with the lack of prefiled evidence filed by NOMA in this

proceeding, and its counsel's proposal to lead prefiled

evidence through evidence-in-chief and not through -- sorry,

to lead its evidence through evidence-in-chief and not

through prefiled evidence.

I just want to provide some context for this concern,

and then ask for your Board's direction on the next steps.

The evidence filed by NOMA in accordance with the Board's

procedural order for intervenor evidence - I think it was

filed August 1st - consisted of a book of materials.

It did not indicate what evidence NOMA was going to

provide in the form of prefiled evidence, like every other

party in this case, just a book of materials that were to be

referred to.

NOMA later advised -- and on that book of materials,


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because it did not consist of any evidence, there were no

interrogatories asked. There was no statement of what the

evidence was.

NOMA later advised that it would be providing five

witness panels, but, again, it did not provide the evidence

of what those witness panels were going to say.

So I wrote to NOMA or to counsel for NOMA on August

27th, and you have that letter in the package I provided

this morning, asking for the evidence, pointing out that

every other party in this case -- I think there have been 22

other parties who filed prefiled evidence. Every other

party filed prefiled evidence in accordance with the Board's

requirements, and that NOMA hadn't.

So I asked NOMA to provide that evidence. NOMA replied

to this request on August 29th, and I won't take you through

all of the -- that reply has an attachment which sets out

areas of discussion that the evidence -- that the witnesses

propose to cover in evidence, but, again, not their

evidence. We don't know what they're going to say, just the

topics for discussion.

I raised this matter, again, with counsel for NOMA

yesterday. Counsel provided another letter this morning,

dated September 9th, which was also in the package I

circulated. I apologize, the printing of this letter is a

bit off kilter, but you will see it's the same thing. It's

a list of topics to be addressed and not prefiled evidence.

There is still not much direction provided in this list of

topics.


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So, for example, if you look at, say, page 4, there is

a description about what technical matters the evidence will

be provided on. It says: Rod Bosch, Ontario Hydro

operating manager for northwest region, will give evidence

on the need for dispatchable generation, what is and will be

base-load generation, absence of OPA modelling, but, again,

not a statement of what that evidence is, just the topics

that it needs to cover.

The result is, today, after the hearing has started, we

still don't know what is NOMA's evidence. We're not in a

position to file interrogatories, because we don't have that

evidence. And I raise this today, because, unless the

appropriate evidence is provided, unless something is done

rather immediately, the OPA will have to ask the Board to

rule that the NOMA panel cannot give evidence in this case.

The OPA does not seek that result. I don't think that

that is in the public interest. There are people in the

northwest who want to make a presentation to this Board,

want the Board to consider their issues, and the OPA thinks

that there should be an airing of these issues.

The OPA has staff, has a very good working relationship

with the members of NOMA, the people on the ground in the

northwest, and they want to continue that relationship.

But the treatment of the evidence in this case must be

done in an orderly way and compliant with the OEB

requirements, and everyone else has had to follow those

rules and counsel for NOMA should be required to, as well.

And if they don't, then we're not going to have a very good


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hearing of those issues, because the evidence will be

presented in-chief and we will have to deal with it cold,

and that is not how this Board works.

So what I would ask this Board to do is to direct NOMA

to file its evidence in accordance with the requirements, in

accordance with Board practice and in accordance with what

every other party has done in this case.

And it's clear that my conversations with counsel for

NOMA are not going to lead to this happening voluntarily, so

I would like the Board's direction, and I propose a schedule

that the evidence be filed by September 19th. That's next

Friday. That's well after the time frame for everyone else

filing evidence, but, as I said, it is important that this

evidence go in.

The OPA can provide interrogatories by October 3rd. I

know that is a long time, but OPA staff is, frankly, quite

busy right now with the hearing, so this is done on evenings

and weekends, and then responses by October 10th.

I understand that the NOMA -- the trip to the northwest

to consider NOMA's evidence will be towards the end of the

month, so that should provide sufficient time to be able to

prepare cross-examination.

Thank you, Madam Chair. That is the matter I wanted to

address.

MS. NOWINA: Thank you, Mr. Vegh. For NOMA, Mr. Cyr,

Mr. Melchiorre? Mr. Cyr?

MR. CYR: Good morning, Madam Chair and Panel.

MS. NOWINA: Is your mike on, sir?


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MR. CYR: It is.

MS. NOWINA: Go ahead.

MR. CYR: Good morning, Madam Chair and Panel.

We have no problem with the schedule that Mr. Vegh has

outlined, and there certainly is no intention to create any

difficulty here. We will comply.

MS. NOWINA: So you will be providing evidence by

September 19th?

MR. CYR: If not before.

MS. NOWINA: Thank you very much. Mr. Vegh, I think

that deals with the issue, does it not?

MR. VEGH: Thank you.

MS. NOWINA: Thank you. Any other preliminary matters?

Ms. Lea, Mr. Crocker, you want to resume your cross-

examination? We are still with Ms. Lea.

ONTARIO POWER AUTHORITY - PANEL 2, RESUMED

Andrew Pietrewicz, Previously Sworn

Amir Shalaby, Previously Sworn

CONTINUED CROSS-EXAMINATION BY MS. LEA:

MS. LEA: Thank you. As always happens when you don't

close your cross-examination on one day, you always think of

another question to ask.

And I wonder if I could beg my colleague Mr. Crocker's

indulgence to just ask you a question on a topic I didn't

touch on yesterday.

I wanted to ask you about the procurement process

slide, and again this is, I think, at a high level, but I am

looking at slide 113 of your presentation. Let me know if I


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need to go to the procurement panel with this, but, as I

say, I hope it is a high-level matter.

In the third bullet point of slide 113, it is indicated

that the following procurements will be made under

directives, and it's listed as "all conservation

procurements and all renewable supply procurements".

So there are no conservation or renewable sources of

supply procured under the procurement process, at least

until the next filing of the IPSP. Do I understand that

correctly?

MR. SHALABY: Yes. There are sufficient directives to

attain conservation and renewable resources into the next

several years, that is consistent with the plan at this

time. So there is no additional authority required to

procure either renewables or conservation.

MS. LEA: Okay. Then you do list three sources of

supply that will be procured in the last bullet point of the

slide, the combined gas cycle turbine or single cycle gas

turbine in the GTA, the single cycle gas turbine in

Kitchener-Waterloo Cambridge-Guelph and the reliability

contract with OPG respecting Lennox. Those are the only

non-renewable resources procured as far as this IPSP goes

that you are planning to procure if the IPSP is approved.

MR. SHALABY: Those are the projects that we seek

authority from this Board to procure.

MS. LEA: Now, I gather that past the next filing of

the IPSP presuming for a moment that that is in 2010, there

will be additional things to be procured; that's your


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anticipation?

MR. SHALABY: Yes.

MS. LEA: Hmm-hmm. And the approval that you are

seeking of the procurement processes, as I mentioned to you

yesterday, will extend past this IPSP into the filing of the

next one, as far as you are aware?

MR. SHALABY: Meaning what specifically?

MS. LEA: The IPSP itself is required to be filed every

three years but the procurement process is not.

MR. SHALABY: Correct.

MS. LEA: I am presuming it extends until you seek an

amendment or somehow else it is amended.

MR. SHALABY: That's my understanding, yes.

MS. LEA: So the procurement process that you are

seeking to have the Board approve, applies to these three

sources of supply that are in this present IPSP, as well as

sources of supply that will appear in future IPSPs?

MR. SHALABY: Until or unless amended, yes.

MS. LEA: Thank you.

MS. NOWINA: Mr. Crocker.

CROSS-EXAMINATION BY MR. CROCKER:

MR. CROCKER: Thank you, Madam Chair, Members of the

Panel.

Gentlemen, I would just like to start by giving you,

letting know what I am going to be asking you about this

morning, what I want to canvas with you. I want to talk

about sustainability, environmental sustainability and

environmental protection as the OPA was required to consider


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in developing the plan and in fact how you did consider it,

as you developed the plan.

Initially, I want to talk to you about your use of

sustainability, the word sustainability, and environmental

sustainability and determine how the two concepts go

together.

Are they the same thing? Are they something different?

And let me just ask you that question initially and then we

can go to the material.

Describe to me how you did use sustainability and how

environmental sustainability fits with that. I invite

either of you to respond to any of my questions.

MR. SHALABY: Thank you. The term "sustainability" is

broader than environmental sustainability. One of the

concepts of sustainability is to look at more than just

economics or more than just social impacts or more than what

the literature would call socio-ecological impacts, the

impacts on the ecology, so the environment. The other

broadened description of environment include economics and

people and the natural environment, or you drop the word

"environmental" and you say "sustainability" and under it

you would have the broader description.

So we considered sustainability as a broad concept that

embraces more than just economics, more than just society

and people, and more than just the natural environment, all

three of them together in an interrelated way.

MR. CROCKER: All right. If you go to your Exhibit G

at tab 3, at schedule 1, you say in the introduction right


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at line 1, you say:

"This exhibit describes how the OPA considered

safety, environmental protection, and

environmental sustainability..."

MR. SHALABY: Yes.

MR. CROCKER: "... in its development of the integrated

power system plan." Do you see my reference?

MR. SHALABY: Yes, I do.

MR. CROCKER: Okay. What aspect of the environment are

you speaking of there?

MR. SHALABY: Environmental protection is a little more

specific. Environmental protection is the natural

environment in the meaning of the Ontario regulations and

the governance of environmental protection, regulations and

oversight.

MR. CROCKER: What about environmental sustainability?

MR. SHALABY: We wanted to echo the same words that are

in the directive, in regulation 424/4, so we reproduced it

the same way at this stage, but we considered it broadly.

"Environment" in a more broad context.

MR. CROCKER: Okay. If you go to C-10-1, and we -- and

you go to page 9, your heading is, "Concept of

sustainability."

MR. SHALABY: Yes.

MR. CROCKER: Okay. Tell me what you are talking about

there, and what follows in the document.

MR. SHALABY: This is the evolution of the concept, the

broad concept of sustainability. Our tracking of how it


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evolved from the early '70s, our understanding of its

application internationally and to understanding what the

concepts are and what the framework for applying

sustainability is and how could we apply that framework to

electricity planning.

What we sought was applying a very powerful and a very

elaborate concept in development into the electricity

planning, and that's the attempt that we are making at this

stage.

MR. CROCKER: Is it, is that use of sustainability

different than environmental sustainability?

MR. SHALABY: No. Not if you either broaden the

definition of environmental or drop it altogether. It's the

voice carrying? Is the voice experiment works?

MS. NOWINA: Does everyone hear Mr. Shalaby? Everyone

looks happy, Mr. Shalaby. Well, they can hear your voice,

Mr. Shalaby.

[Laughter]

MS. NOWINA: I will correct myself.

MR. SHALABY: I think they're happy.

MR. CROCKER: Then I can look, then, at your discussion

in C-10-1 for a requirement to comply with the provisions of

Reg. 424, can I?

MR. SHALABY: That was our interim thinking in 2006.

This is a discussion paper that we took feedback on and

evolved our thinking further into the evidence in this

particular hearing B-3-1, for example and so on. This was

our thinking at the time and the evolution of thinking


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continued.

MR. CROCKER: All right. Let's go to B-3-1, then.

If we go to page 5 of B-3-1, you ask the question, at

line 17: "How was sustainability considered in the

development of the IPSP?" Once again, this is

"sustainability" and "environmental sustainability" used

interchangeably, is it?

MR. SHALABY: Yes.

MR. CROCKER: I can look to what you have discussed

here to see whether compliance has occurred with respect to

the requirement of the regulation?

MR. SHALABY: Yes.

MR. CROCKER: Okay. If we go to the regulation, and I

don't know whether you have it in front of you, but I will

-- if you haven't, I will read you what I am concerned with

anyway.

MR. VEGH: Perhaps for the assistance of the panel, I

think the regulations are set out in the back of the Board's

guidelines.

MR. CROCKER: Okay.

MR. VEGH: Exhibit A-3-1.

MR. QUESNELLE: Microphone, Mr. Vegh.

MR. CROCKER: Are you with me?

MR. SHALABY: Yes.

MR. CROCKER: Okay, the regulation says - I am looking

at section 2, sub 1 to start:

"In developing an Integrated Power System Plan

under subsection 25.3(1) of the act, the OPA shall


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follow directives that have been issued by the

minister under subsection 25.30(2) of the act and

shall do the following ..."

And 7 says:

"Ensure that safety, environmental protection and

environmental sustainability are considered in

developing the plan."

What I would like to know is how you use the word

"consider". What did you feel your obligations were to

consider the two elements that I am talking about,

environmental sustainability and environmental protection?

MR. SHALABY: Are you sure we want to go over that

again?

MR. CROCKER: Well, I would like you to tell me.

MR. SHALABY: The scoping phase of this hearing spent

enormous amount of time on that specific question and I hate

to upset the apple cart. I mean, there was a -- what we did

in planning, apart entirely from the legal discussion on

this --

MR. CROCKER: That's what I would like you to tell me,

what you did in terms of planning.

MR. SHALABY: Yes. What we did is we looked at in what

way safety -- let's talk about safety and environmental

protection first. Is that your question, or do you want to

go to sustainability only?

MR. CROCKER: If you would like to talk to me about

safety and environmental protection, please do, and then you

can talk to me about environmental sustainability


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afterwards.

MR. SHALABY: We looked at all three, but we found that

there is a large degree of governance, regulations,

tradition in Ontario in relation to safety and in relation

to environmental protection.

We also found that in discussing the literature on

safety, for example - we reviewed some of the literature on

safety - that safety will not be a differentiating factor in

picking technologies or picking options for electricity

planning.

We refer to that -- or it is referred to in the Stratos

review. There is an institute in Switzerland called the

Paul Scherrer Institut that collects safety statistics for

electricity generating technologies, and they go into the

life cycle of all of the generating technologies.

And their conclusions are they really are a subject of

-- what they find is that the fossil generation chains have

higher safety incidents than non-fossil generating chains,

but it really is a function of construction practices, a

function of oversight in the country.

So they divided the statistics between the OECD

countries and non-OECD countries, and found a stark

difference owing to the safety practices and construction

practices and operating practices.

All of that led us to conclude that it is all in the

oversight, it is all in the governance, it is all in the

regulations to do with safety and environmental protection,

training, audits, reporting, rehearsals. There is all kinds


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of things in the safety and environmental protection that is

well developed in Ontario, and we're satisfied that the

infrastructure and the governance is in place to look after

those.

There is nothing that differentiate a gas-fired

generation from a nuclear-fired generator from a

hydroelectric or wind turbine at the planning stage. They

all are governed in ways that ensure safety and

environmental protection.

So that's one avenue.

We found a lot less developed thinking around

sustainability, specifically. We found it more developed in

the federal scene. The federal legislation adopts the word

"sustainability" and applies it to air, land and water

quality in some of the federal environmental legislation.

None of the Ontario legislation or regulations that we

examined refer explicitly to sustainability. So

sustainability was less developed as a concept, explicitly

at least. What we found is that it is implicit in many

things that Ontario does, reduction of emissions, reduction

of pollution, consideration of future generation, the well

being of -- it is implicit in many of the things that

Ontario does, but not as explicit as safety and


So we dedicated more time to understanding the concept

and its applicability to electricity planning.

So that's why we dedicated more time and more paper to

describing sustainability than to environmental protection


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and safety, although we considered all three very

rigorously.

If I move on to how we considered sustainability, very

simply, we understood the evolution of the concept, the

history of the literature. It started in United Nations

conferences on human development and environment. 1972 is

marked as one starting point.

The literature -- I can take you back to books that are

written in 1920s, but let's take the 1972 conference in

Stockholm, where environment and economic development were

seen to be clashing, particularly in Third World country

development projects where economic development was seen to

have environmental damage and has inequity in the societal

benefits that it generates. That's the origin of the

thinking, the origin of trying to grapple with societal,

environmental and economic development.

The thinking evolved and was completed a step forward

in the Brundtland Commission report in 1987, and in the Rio

Earth Summit in '91/'92, and further from there we found the

review and discussion at the University of Waterloo.

The University of Waterloo environmental studies people

came to speak with us in 2005. They were preparing a

comprehensive survey of sustainability frameworks. We found

that useful to learn the language of sustainability, to

learn how other people applied it elsewhere, and to guide us

into applying the concept to electricity planning.

So that's how we considered sustainability, evolution,

understand the concept, understand the framework for


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applying it, and then applying it to this particular plan.

MR. CROCKER: Okay. I think I understand what you have

done up to the point of how you applied it, and that's, in

fact, what I would like to talk to you about as we go

forward.

But when you say "consider", or when the regulation

says "consider", what you have just described to me is how

you considered it; is that correct?

MR. SHALABY: That is how the plan has considered it,

yes.

MR. CROCKER: Okay. And what did you understand your

requirement to be with the expression "in developing the

plan"?

Did you think you had an obligation beyond what you

have just described to me, or do you think you have -- you

satisfied your obligation in how you described it to me?

MR. SHALABY: We satisfied the obligation. We

considered it while developing the plan, not after

developing the plan.

We considered it in working with the options that we

worked on, and in putting the plan together and in

presenting it to Ontarians in this forum here.

MR. CROCKER: You said something earlier in your answer

to the question I just asked you, which reflects something

that you said yesterday morning, as well, when you were

going through your slide deck, and I just want to make it

clear that I understand you.

You said that environmental protection, particularly,


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and environmental sustainability, as well, were not factors

that the OPA used in differentiating among choices in the

IPSP; is that correct?

MR. SHALABY: I suspect you meant safety and


MR. CROCKER: No, I meant environmental protection and

environmental -- and sustainability, but correct me if I am

wrong.

MR. SHALABY: No, sustainability -- sustainability was

reflected in the planning criteria, and the planning

criteria differentiated between options and plans.

MR. CROCKER: Okay. Then we will follow that along.

MR. SHALABY: So sustainability was translated -- the

key translation was to move from sustainability concepts and

requirements into a context-specific set of criteria, to

move from the literature, from ideas, to application, to

electricity in Ontario in 2007.

That's where the specific criteria that we developed

were put in place.

MR. CROCKER: Okay.

MR. SHALABY: And those started differentiating between

options and plans.

MR. CROCKER: Okay. We will follow that along more

carefully as we go.

MR. SHALABY: Right.

MR. CROCKER: My recollection of the scoping discussion

and the position of the Board with respect to "consider" was

that you would -- your requirement was to weigh and


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evaluate. Is that a fair description of what the OPA did?

MR. SHALABY: Yes.

MR. CROCKER: Okay. I would like to go, then, to B-3-1

and look with you at the methodologies that the OPA used and

how you applied particularly environmental sustainability.

We will get to environmental protection later on in this

discussion, but environmental sustainability to the IPSP.

As I understand it, you considered a broad range of

issues with respect to sustainability and then you kind of

settled on Professor Gibson's discussion of sustainability

and worked from broad concepts to more site-specific or

context-specific issues. Is that a fair description of what

you did?

MR. SHALABY: We found the publication of this book

just at the same time that we were looking for a way to

translate the concept into practical guidance. That is what

the book attempts to do, is to, you know, when you read the

introduction and the preamble to the book, is to marry

sustainability concepts to environmental assessment

practitioners, the practice of environmental assessment to

sustainability concepts. And it surveys the practices

worldwide and it brings some case studies to light. So it

was a very useful document that we found to come our way at

a time where we needed an application guide, and that was

one of the guides that we used in developing our thoughts

and documenting our application.

MR. CROCKER: Did you retain Professor Gibson?

MR. SHALABY: He advised us in a -- something called


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the sustainability advisory group. He was a member of an

advisory group of five that worked to advise us for two days

in 2006.

MR. CROCKER: All right.

MR. SHALABY: We did not retain him beyond that. He

spoke to us in 2005 as a guest lecturer, to our planning

group on literally the eve of releasing the supply mix

advice in December of 2005. Other colleagues from

environmental studies in Waterloo spoke to us before that.

MR. CROCKER: All right. If you go to page 8 of

Exhibit B, tab 3, you have cited table 1, "Requirement for

progress towards sustainability." That is Gibson's work, is

it not?

MR. SHALABY: It is. It is a summary of that. The

complete citation is elsewhere, and we expand on it. We

have the full description elsewhere.

MR. CROCKER: You used –-

MR. SHALABY: The book is available as well.

MR. CROCKER: You used those concepts, did you not, in

terms of establishing your broad criteria to --

MR. SHALABY: What these requirements -- requirements

are one of the things that a framework for sustainability

would require. There are other things. But the

requirements provided us with the language of sustainability

as an example.

I mean, this language here is new to us, in planning,

in this particular form.

So it provided us with the language of sustainability


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and what the concepts are. Description of the concept of

intergenerational equity, the concept of livelihood

sufficiency, the concept of socio-ecological stability, all

of these are concepts that -- the language is different and

more in the language of sustainability. And the description

of what the words mean in more expansive terms. So it was

very helpful to us in that regard.

What the idea is, is to consider these requirements

when planning or when developing a project, or when applying

sustainability to a particular plan like the electricity

plan that we are presenting here today.

MR. CROCKER: Same concepts appear in C-10-1 at page

11, I think.

MR. SHALABY: I will take your word for it, yes.

MR. CROCKER: How then, as we go through this process,

to get from these broad concepts to the planning criteria

you ultimately used, how did you then consider what

Professor Gibson had done, the work that he had done, beyond

simply providing you with language?

MR. SHALABY: It is the -- the framework, as we

understood it, was to understand that these are

requirements. When you want to consider sustainability,

consider these requirements. Consider them together.

And develop criteria that are context-specific. And

the cases of the Voisey's Bay mine development is an

illustration of concept-specific, context-specific criteria.

The Mackenzie Valley pipeline, there is a case study on that

as well, how the criteria were developed for the Mackenzie


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Valley pipeline. There are other cases in world development

in the book as well, villages and different other irrigation

projects and health projects and so on.

So the key is that the practitioner, the people who are

applying this, know the context. They know what matters in

their context, and what is relevant in their context.

Can they develop criteria that take into account these

requirements while developing their criteria? And that's

what we have done.

We think the criteria that we developed, the six

criteria we developed, are consistent with these

requirements.

And we went through some description in Exhibit B-3-1,

to describe how is it that the criteria that we developed

are consistent with these requirements or can be made to

include attention to these requirements. So that's a leap

from literature and concepts and theory into practice, and

the practice is knowing the context for electricity.

And the context for projects is much richer. The

literature on projects is much richer than the context for

plans. Applying sustainability concepts to plans is a lot

thinner a practice in history than to projects. So Voisey's

Bay is a project. The Mackenzie Pipeline is a project. To

do a strategic plan -- the book describes the application to

strategic plans, but -- not in the same depth as it is to

projects when there are affected water sheds, affected

people, affected airsheds, affected roads and so on that are

specific.


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So the application to a plan is context-specific thing

that we brought into the criteria that we had.

The fact that we're working within government

directive, the fact that it is electricity, electricity has

peculiar things and specific things about it that has to be

applied. All of these things -- I described the context

yesterday in my slides. We applied that. We applied the

requirements and the understanding of sustainability to come

up with six criteria that are consistent with these

requirements.

MR. CROCKER: Okay. And those --

MR. SHALABY: The mapping is not one-to-one and that is

not algorithmic and it is not hard-wired or anything else

like that and that's how we understood the application of

sustainability: Understand the requirements, understand

your context, and come up with criteria that are consistent

with those requirements. And that's what we did.

MR. CROCKER: Okay. I am still not 100 percent sure I

understand how you got from the broad to the narrow, but we

will go back to it again, I think.

Those criteria are set out, I believe, on page 12 of B-

3-1.

MR. SHALABY: Those are the planning criteria; you are

correct.

MR. CROCKER: Okay. How long did it take the OPA to

get from the broad concepts that Gibson and others may have

given you, to the development of these criteria?

MR. SHALABY: The development --


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MR. CROCKER: And how many people were involved?

Describe the process of it.

MR. SHALABY: The process is an iterative one, is an

evolutionary one. I described that yesterday. These

criteria evolved over time.

They evolved from the very first documents that we

issued on planning in 2005. We had criteria there.

We had criteria in the scoping document for

consultation in 2006, the overview document, which is an

exhibit in this proceeding as well. So we had criteria

there.

Then we had criteria going into consultation. So it

has evolved over time.

We wanted openness to be a criteria and transparency

and consultation and listening. We used these words at

various times.

We consolidated that now into the language of

sustainability that we see in front of us.

We had environmental performance as a criteria all

along. We consolidated that into the criteria that we see

in front of us. So it took, I would say, two years from the

beginning of the set of criteria in 2005 to another set in

the middle of 2006, to another set in late 2006.

That's the evolution of our thinking about criteria to

guide planning. Along the way, we had the sustainability

thinking inform us in conceptual ways to start, and a little

more structured way along the way, and, finally, after

consultation with stakeholders, we settled on these planning


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criteria.

MR. CROCKER: How was that plan developing at this

point? Were you working on developing the plan at the same

time?

MR. SHALABY: Yes. Yes.

MR. CROCKER: You were?

MR. SHALABY: Yes, we were. We had a preliminary plan

in 2006. We had scenarios and options that we developed in

2005. All of that is iterative and in parallel, as well.

MR. CROCKER: Isn't it more traditional to develop the

planning criteria, and then develop the plan in that

context, as opposed to developing them both together or

considering them both together?

MR. SHALABY: It is, and we had criteria. We had

criteria all along. The criteria crystallized. The

criteria developed over time. So did the plan. We were not

-- we were not developing without criteria to start.

We did in 2005, we did in the middle of 2006, we did in

late 2006, and we stated the criteria that we were working

with all along. Just the wording of them, the evolution of

the thinking, and how we use them became more structured and

more crystallized as we went along.

MR. CROCKER: Okay.

MR. SHALABY: And enriched by our understanding of

concepts and ideas as we went along, and stakeholder input

and all of the things that we considered in developing the

final set of criteria.

MR. CROCKER: Okay. Let's go through these six


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criteria and see how they manifest themselves in the

prefiled material specifically.

Let's start with feasibility. On page 14 of B-3-1,

your heading at line 7 is:

"How is feasibility taken into account in

developing the IPSP?"

Do you see that?

MR. SHALABY: Yes.

MR. CROCKER: You say, in the middle of that paragraph:

"For transmission OPA undertook corridor level

assessments of specific study areas to establish

feasibility from an environmental perspective."

You take us to E-3-1, E-3-3, E-3-10.

MR. SHALABY: Yes.

MR. CROCKER: Let's go there for a little bit and

follow that along and see where we get.

MR. SHALABY: I will very quickly refer you to the

transmission panel that is coming up, but we can --

MR. CROCKER: Let's start the discussion, and I am sure

that you will deflect what you are not comfortable

answering, not that I can see anything that you are not

comfortable answering, but maybe there is something.

MR. SHALABY: Yes.

MR. CROCKER: But you will deflect what you think is

more appropriate to the transmission panel.

MS. NOWINA: Mr. Crocker and Mr. Shalaby, I have a bit

of a concern that Mr. Shalaby could answer every question

and he could be here for the next six weeks, and we would


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never get to the other panels.

So it is partly Mr. Shalaby's comfort, but I would

suggest partly, also, the reasonableness of addressing this

in the panel which is supposed to be looking at an overview,

as opposed to a panel which has technical expertise and will

be dealing with the details later.

So I just remind you of that, I will also remind you,

Mr. Crocker, of the estimate that Board Staff gave me for

their cross-examination. If you ask Mr. Shalaby to answer

every question in detail, it may take longer than you had

estimated.

MR. CROCKER: I am going to try to stick to

environmental sustainability, actually, rather than some of

the other issues.

MS. NOWINA: Which is not addressed later, all right.

Thank you.

MR. CROCKER: Yes.

MR. SHALABY: We have E-3-1.

MR. CROCKER: You are ahead of me. That's where we're

going. I haven't got there yet.

E-3-1 is the north-south transmission reinforcement.

MR. SHALABY: It is, yes.

MR. CROCKER: Okay. And if we could turn to page 25?

MR. SHALABY: I have that.

MR. CROCKER: You deal with Ontario Regulation 424/04

requirements?

MR. SHALABY: Yes.

MR. CROCKER: You say in -- and I will leave most of


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this discussion to the transmission panel, but you say in

the last paragraph, starting at line 22, "Hardy Stevenson",

and just for clarification, that is not an individual, but

that is an environmental planning company?

MR. SHALABY: It is both an individual and a planning

company.

MR. CROCKER: Okay. "...performed an environmental

analysis..."

MR. SHALABY: I mean, there are two individuals. It's

names of two individuals.

MR. CROCKER: It's Hardy and Stevenson?

MR. SHALABY: That's right, yes.

MR. CROCKER: "...performed an environmental analysis

and concluded that there were no significant

corridor restraints that would prevent development

of a transmission line from the Sudbury area to

the GTA in an environmental acceptable manner. In

arriving at this conclusion, Hardy Stevenson

assessed potential environmental impacts in four

study areas."

Can I ask you to tell me, please, what were the terms

of reference given to Hardy Stevenson? What were they

supposed to do?

MR. SHALABY: The concept of environmental assessments

described in this particular proceeding -- and I would refer

the Board to the transmission panel, but for projects that

were going to go into environmental assessments within the

next five years, an additional requirement was stated in the


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regulation; that is, to do a planned environmental

assessment or strategic environmental assessment, or some

assessment of the feasibility. We considered it to be the

feasibility of building transmission from one place to

another.

So the specific --

MR. CROCKER: Can I cut you short, just for the

purposes of keeping within my timelines?

MR. SHALABY: Right.

MR. CROCKER: Feasibility, then, can I take it that

feasibility for the purposes of this project only dealt with

the -- for the purposes of brevity, the environmental

assessment requirements; that is, the section 8 requirements

of the regulation, not section 7 requirements?

MR. SHALABY: Section 7 is what -- what is -- section

7, that is safety, environmental protection and

sustainability?

MR. CROCKER: Right, yes. It did?

MR. SHALABY: No. It looked at land use and

environmental impact, natural environmental impact from --

and social, cultural features along the way, as well.

MR. CROCKER: From a paragraph 7 point of view - that

is, environmental protection and environmental

sustainability - or paragraph 8 point of view - that is,

where there are environmental assessments going to be done,

they had to do that assessment work? Which of the two?

MR. SHALABY: They focus more on 8. I need them to

describe their scope of work more fully. My understanding


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is they focussed more on paragraph 8.

MR. CROCKER: Not on paragraph 7?

MR. SHALABY: I would leave them to describe that,

whether it included 7 or not.

MS. NOWINA: Excuse me, Mr. Crocker, before we do that,

before we leave it to the transmission panel, I would like

to clarify something.

According to our schedule of what each witness panel is

addressing - Mr. Vegh, you may want to respond to this - OPA

has identified that this panel is dealing with the

sustainability question.

So the point here is, if we leave these questions to

the transmission panel, is it the OPA's intention that they

will answer questions on sustainability as it relates to

transmission?

MR. VEGH: So if I can answer that, I think the concern

was that the question was asking for the terms of reference

for the actual study carried out, and there was some

legalistic issues around paragraph 7 and paragraph 8.

I thought the general gist was feasibility and how

feasibility was taken into account, and practical

applications of that and the planning criteria.

So if the question is, What does feasibility mean as a

planning criteria, I think the question is appropriate to

this panel. And this panel can probably provide some

general overview what the areas were that were taken into

account. But you will see in each particular chapter on all

of the resources - the conservation resources, supply


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resources, transmission resources - there is a portion in

each chapter on how those criteria were applied for each

particular issue. How were all of the planning criteria

applied for conservation, for supply resources, and for

transmission?

So if the question is: How were the planning criteria

applied to make specific decisions within those chapters? I

believe that those questions are appropriate for the witness

panels that deal with those chapters. If the question is,

more general level: How are the planning criteria arrived

at, what do they consist of? Then I would suggest those

questions are appropriate for this panel.

MS. NOWINA: If the question was: How is

sustainability considered in relation to these transmission

projects? That's more appropriate for that panel?

MR. VEGH: Well, sustainability, again, leads to the

planning criteria. So the specific panels will be able to

address how the planning criteria was applied. The way in

which that planning criteria relates to sustainability, is

really outside of their scope and that would be more for

this panel.

So I think the question to the other panels would be:

How did you apply the planning criteria? And they won't

really be in a position to defend how the planning criteria

relate to the considerations of sustainability. They're

planners.

So that more global question, is really for this panel.

Once this panel is completed, the future panels that deal


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with the specific resources aren’t going to be able to shed

a lot more light on sustainability and, for example, how

sustainability informed the concept of feasibility. They

know what feasibility means within their specific context

and how -- applied that criteria to the choices that they

had to make, but wouldn't really be able to say feasibility

is tied to sustainability by reference to sort of chapter

and verse of different primary sources.

MS. NOWINA: Did that discussion help you at all,

Mr. Crocker?

MR. CROCKER: It did. And I cut Mr. Shalaby short

because he was going to get into a discussion of section 8

concerns which I thought were more appropriate for the

transmission panel.

I will ask you a broad question. The only reason I

went to Exhibit E was because you directed me –- you, the

OPA, directed me to in the paragraph that I cited.

Describe to me, then, how issues of sustainability are

considered under the heading, under the planning criteria

rather than the heading, feasibility, and if it is of any

assistance, you can use the transmission examples that you

provided or any other example that you feel more comfortable

with.

MR. SHALABY: I will go back to some of the slides we

presented yesterday.

The quote that we have and the -- it's a common sense

thing. If you try and address sustainability requirements

with options that are not feasible, it just -- it doesn't


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address the sustainability requirements and does not address

the context-specific needs. I mean, it's almost a

commonsensical thing, that the tool kit has to be viable and

you have to have confidence that the recommendations you are

making are feasible and the source of that confidence and

practicality of it differs, depending on what the option is

and what the timeline is and how much of it you need and so

on.

So I am not sure whether I am addressing the specific

concern that you have, or not, beyond saying: A plan does

not address any requirements if it is not feasible. An

option that is not feasible is not going to correct anything

or address anything, or do any -- have any impact on

customers, good or bad.

MR. CROCKER: If we turn that around, if I look for how

the OPA considered environmental sustainability when

applying the planning criteria feasibility, where do I find

that? How do I find that?

MR. SHALABY: One specific thing is the lead times. So

we do not say, we do not say standards for electricity

efficiency are going to be in place in 2010. All of them.

We know it takes time and it takes time to have an

impact on consumption of electricity. That's a lead time

consideration. It takes time for more efficient buildings

to be built, and for more efficient fridges to be bought,

and used, and to have an impact on electricity use. It

takes time.

We do not say you can build nuclear, new nuclear in


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2009. It takes ten years to have the first units of new

nuclear on line.

So the lead time is one very obvious way feasibility is

applied to the plan. Is that the kind of information you

are looking for?

MR. CROCKER: Well, I am in your hands. You tell me

what you think I am looking for.

MR. SHALABY: Well, so that's a concrete example. The

other concrete examples have to do with feasibility of

supplying the resources that are needed to supply the

generating stations.

Natural gas is an example. It's an issue in this

proceeding and an issue with stakeholders. Is

infrastructure for natural gas sufficient to fuel the

natural gas fleet that we are proposing in 2010, 2012? Will

it meet the requirements? That's another issue on

feasibility.

Will it or will it not? You cannot build natural gas

stations without sufficient pipes and storage, and this

Board had a large proceeding on the interface between

electricity and gas issues, to ensure exactly that

feasibility and to plan for it, particularly the storage

aspects and the delivery aspects.

So that's another example of feasibility of options and

assuring the feasibility of supply of electricity from the

options that were specified. Those are two examples. I can

go on and give you more, if you like.

MR. CROCKER: No. If you are comfortable with your


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answer, then I am comfortable with it.

MR. SHALABY: I want to know whether your question was,

that satisfies your question? Because your question was

less than totally crystal clear in my own mind at least.

MR. CROCKER: Well, I am going to leave the issue I

think to others who are going to follow up on that and I am

going to move on.

MR. SHALABY: All right.

MR. CROCKER: Let me just ask one sort of follow-up

question. If I were to go through all of the transmission

examples that you listed in that paragraph, E-3-1 to E-3-10,

the -- what I am going to find is a discussion of issues

with respect to the requirements in paragraph 8 of the

regulation, not 7; is that correct?

MR. SHALABY: Yes.

MR. CROCKER: Okay. Then let's leave that, then, to

the transmission panel.

Let's go on to reliability. In answering the question

-- and once again, these are the planning criteria that you

on behalf of the OPA, and the OPA is suggesting, in this

prefiled material, was applied in the context of, or to

reflect environmental sustainability. I am not

misinterpreting, am I?

MR. SHALABY: You are not misinterpreting.

MR. CROCKER: Okay. Then if we go to reliability --

MR. SHALABY: I am not going to split hairs about

reflect, consider, consistent with. Let's go beyond that

for now, but they are consistent with the requirements for


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sustainability.

MR. CROCKER: Okay.

MR. SHALABY: Yes.

MR. CROCKER: You say, on page 15 of B-3-1, at -- yes,

page 15, line 15, you describe how or you ask the question:

"How was reliability taken into account in developing the

IPSP?" You say, "This determination is based on assessment

of future demand," and you give the example of D-1-1, "a

projection of how the current and planned resources will

perform over time," in D-3-1, "and assessment of future

uncertainties to a determination of the planning reserve

requirements," in D-2-1.

Then you go back, again, to Exhibit 5 -- I'm sorry,

Exhibit E-5-1, E-5-6. These are transmission projects.


MR. CROCKER: D-1-1, D-3-1, D-2-1, those are

forecasting, are they not? Forecasting?

MR. SHALABY: Assessment of requirements, yes.

MR. CROCKER: Okay. Explain to me where I find issues

of environmental sustainability when I look at those aspects

of the plan. Where do I see the consideration of

environmental sustainability?

MR. SHALABY: If we go back to the requirements list,

the sustainability requirements, providing people with

necessities in life, livelihood, the words "livelihood",

"sufficiency" and "opportunity", providing that everywhere

in Ontario, not just specific places in Ontario, so equity

in providing reliable supply, providing that over time to


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future generations, as well as current generations - that

is, intergeneration - so providing reliable electricity

everywhere in Ontario provides for requirements for

sustainability.

Sustainability requires that people have access to what

they need to live well and to live a productive and safe and

healthy life, and electricity certainly does that, and

providing reliable electricity everywhere in Ontario for

every time period between now and 2025 certainly contributes

to that requirement.

That's where you find it. So we assess the

requirements for people. We assess how to meet these

requirements, every time, everywhere and for every year in

the plan.

MR. CROCKER: And that falls within the OPA's

definition or description of environmental sustainability,

does it?

MR. SHALABY: That is a requirement of sustainability,

is to consider whether people have enough to live a decent

life, a safe life, and it's distributed equitably within a

geographic or -- jurisdiction and considers future

generations.

So this is why I am saying it is not a one-to-one.

It's not a mapping of requirements to criteria, but

certainly having reliable electricity in Ontario for 20

years to all of the people of Ontario is consistent with

many of these requirements.



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MR. SHALABY: So while reliability is an old concept

and people said, Well, we always had reliability as a

planning criteria, well, it turns out that sustainability

requires reliable supply of electricity, sufficient

electricity, distributed everywhere in Ontario, to this

generation and next.

So while -- the criterion is something that we used in

the past, and it turns out that it is consistent with many

requirements of the sustainability when you understand

sustainability in the way that we did.

MR. CROCKER: All right. Let's do the same thing with

respect to the next planning criteria, which is flexibility.

MR. SHALABY: Correct. That now addresses a different

set of requirements, and that's adaptability, precaution,

planning for uncertainty, being ready for the world to

unfold in ways different than you foresee, and not being

surprised by that and cornered into unpalatable options.

Plan sufficiently that when uncertainties emerge, you have

good options and you respond well.

That is, roughly speaking, what flexibility provides

for. That is consistent with sustainability requirements.

MR. CROCKER: At B-3-1, at line 3, you ask the

question:

"What are the typical uncertainties considered in

determining resource requirements?"

MR. SHALABY: Line 3 of what page, so I can follow?

MR. CROCKER: Seventeen.

MR. SHALABY: Okay. Yes.


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MR. CROCKER: And you describe them in the following

six or seven lines, or so, and I am going to ask you the

same question. Where do I see a discussion of environmental

sustainability when the planning criteria of flexibility is

applied or is discussed by the OPA?

MR. SHALABY: Well, the page previous, page 15, the

discussion starting at page 15 describes the link between

sustainability requirements and flexibility. Is that the

nature of the question that you are...

MR. CROCKER: I think my question was pretty clear. We

have developed a pattern now. I think the question was

clear. You do your best to answer.

MR. SHALABY: Can you go over it again?

MR. CROCKER: Yes. When I look at the application of

the planning criteria flexibility, when you -- in the

prefiled material or in any other material, in determining

how the IPSP was developed, where do I see a discussion of

sustainability -- I'm sorry -- yes, sustainability or

environmental sustainability?

MR. SHALABY: You see it in the link that we have

between the sustainability requirements and the development

of the planning criteria, so not in the application of the

criteria, but in the development of the criteria. So we go

from requirements to criteria. Then you apply these

criteria.

In every section, every panel that will be appearing in

front of you will describe how they applied the criteria.

So that's how sustainability is applied.


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It is applied through the criteria.

MR. CROCKER: Once again, then, I take you back to one

of the earlier questions I put to you.

Isn't it normal to establish the criteria, and then

develop the, in this case, plan, in the context of those

criteria rather than the other way around as you have just

described?

MR. SHALABY: We always had criteria. I answered that

earlier. We had -- flexibility was one of our criteria from

day 1 --


MR. SHALABY: -- and managing risks. We called it

managing risks, we called it flexibility, we called it

adaptability, along the way. This was always a criterion.

In fact, it was accorded a specific discussion in the early

discussions of the planning papers and it is throughout our

planning discussion.

So it is entirely consistent with what you described.

We always had criteria and we always developed plans

according to these criteria. Both of them evolved over

time. Both the description of them and the application of

them evolved over time.

MR. CROCKER: Okay. I will just ask the question with

respect to flexibility one more time and I won't ask it

again.

If I were to look, then, in the material, I won't find

a specific discussion of how sustainability was considered

by the planning criteria flexibility. It was the other way


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around? The planning criteria was developed in the context

of a sustainability framework; is that right?

MR. PIETREWICZ: Sorry, can you please repeat the

question?

MR. CROCKER: I am not sure I can.

MS. NOWINA: I can read it back, and I think it might

be helpful to break it into -- you asked two questions, Mr.

Crocker. We will do them one at a time.

What you said is:

"If I were to look, then, in the material, I won't

find a specific discussion of how sustainability

was considered by the planning criteria

flexibility. It was the other way around?"

That is the first question.

MR. SHALABY: Sustainability considered by the planning

criteria flexibility? Sustainability requirements talk

about adaptability, precaution, adaptation, respect for

uncertainty. So if we go to page 8 of B-3-1 -- why don't

you go through that?

MR. PIETREWICZ: Perhaps I can be helpful.

MR. CROCKER: Please speak up, Mr. Pietrewicz.

MR. PIETREWICZ: Sure.

As Mr. Shalaby was trying to point out, the plan itself

was developed to reflect flexibility.

As we pointed out in our presentations yesterday,

flexibility and adaptive capability of the plan itself is a

salient feature of the plan, and we have illustrated that.

We have explored flexibility and adaptive capabilities


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through the explanation of scenarios, among other things,

and proposed that the plan should be flexible enough to meet

a range of resource requirements across a variety of

potential futures.

That treatment of flexibility, I think, is

acknowledging what is described in B-3-1 as a planning

criteria called "flexibility", which traces, I think, its

origin in the sustainability language to what we have listed

in Exhibit B-3-1 on page 8 in table 1. And that larger,

sort of more -- less context-specific criteria or

requirement of sustainability was called precaution

adaptation.

So in other words, the plan itself is meant to embody

flexibility. That flexibility is one of our planning

criteria, which is outlined in B-3-1 on page 12, table 2.

And those criteria were developed in consideration of a

larger sort of constellation of sustainability requirements

that are detailed in table 1 on page 8 of B-3-1, and one of

those requirements is precaution and adaptation, which we

applied specifically and we called it flexibility.

MR. CROCKER: Thank you. Madam Chair, I can't

remember, is now the time when you wanted to take your

morning break?

MS. NOWINA: 10:30 is when I planned it, but if this is

a good time for you we can do it now.

MR. CROCKER: It makes no difference. I just lost

track of exactly when.

MS. NOWINA: 10:30.


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MR. CROCKER: Okay.

All right. The next planning criteria is cost. Once

again, can you explain to me how -- can you explain to me

how the concepts of, the concept of environmental

sustainability is reflected in the application of, or in the

development of if you are more comfortable with that, the

planning criteria cost?

MR. SHALABY: Yes. Again, cost is one of those

criteria that has been around in most planning exercises.

It's a common one. It has applied for -- for many, many

planning cycles before the formal requirement to consider

sustainability.

So what we find is, again, the livelihood, sufficiency

and opportunity is a criterion that says: Can people afford

electricity? Is electricity affordable? As I said

yesterday, that's a subjective and a difficult question to

answer in its entirety, in terms of the entire population of

Ontario, every customer, every industrial customer, every

school board, and every consumer. But generally, the costs

of electricity would affect affordability of electricity in

Ontario.

So keeping in mind the requirement to provide for

livelihood, sufficiency and opportunity to Ontarians, cost

is a factor in that. And information about cost would

inform us on whether, in fact, electricity is contributing

to livelihood, sufficiency and contributing to opportunities

in Ontario, or not. That's one way.

There are other more subtle ways, the way we assess


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costs, deals with the long term.

The approach of using levelized cost gives similar

weight to long-term benefits and cost as to present costs

and benefits. If you use an accounting technique for

describing "cost" -- I don't want to get into a whole lot of

amortization and interest depreciation, but if you used an

accounting description of costs you would come to a

different assessment than if you used a levelized assessment

of cost. A levelized cost gives importance to the future.

A social discount rate gives more weight to future

values than a high discount rate, as an example. So these

are other ways in which the way we applied cost is

consistent with considering the future, with giving weight

to future value and future cost. The way we did Monte Carlo

assessment or uncertainty assessment in the cost category is

consistent with considering uncertainties and the impact of

uncertainties.

So while the word "cost" is a traditional criterion,

you find the way we applied it, the way we considered cost,

the way we considered uncertainty in the cost is consistent

with some of the requirements for sustainability.

I can go further and say that the price of electricity,

of the commodity, at least, is uniform in Ontario. Delivery

may be different, but it is intergenerational, uniform

availability of electricity in Ontario at similar price.

So you can say the cost description captures a number

of the requirements for sustainability.

MR. CROCKER: Were the planning criteria that we're


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discussing here applied equally? That is, they were

weighted equally, in terms of your analysis? Or were there

elements -- some of those criteria given more weight than

others?

MR. SHALABY: They were addressed sequentially. We did

not get into weighting of criteria. That's, in fact,

one of the learnings we had from the sustainability

requirements in literature, is that trying to meet all of

the requirements, try and meet all of the criteria, and for

that reason we didn't present you with alternatives that we

set up and shoot down and say: That doesn't meet the

criteria. It is more productive to develop alternatives and

plans that meet all of the criteria.

Why develop plans that we know will not meet the

criteria? It is a good academic exercise, it is a good

study, but I think it is more productive to put our energy

into developing plans and alternatives that meet the

criteria, all of them.

So there is -- and that was a learning that we had.

Try and not to trade off one criteria against the other

early on. Do the trade-offs only if you have to and only if

necessary. But going in, attempt to meet all of the

criteria, attempt to find options and plans that meet all of

the criteria.

So that was our going-in assumption and that is why we

did not get into alternatives but got into a solid plan that

meets all of the criteria.

Now back to the sequential going-through the criteria.


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If something was not feasible, it stopped there. It does

not get subjected to other criteria evaluation. It doesn't

pass the first filter.

So we had the notion of filters. Right. Then we went

into reliability. If the plan is not reliable, and not

flexible, those two together are requirements that were

important to meet. It did not get into being costed and

being evaluated for that.

Finally, when a plan is feasible, it is flexible, is

reliable, and we assess its cost, we see whether we need to

differentiate, is there anything more that can be said about

sustainability, about environmental performance or about

societal acceptance? We decided, for the plan that we

presented, that all of the options that we present, the

entire plan is societally acceptable for the four reasons we

mentioned yesterday and we continued to mention today and we

described the performance, the environmental performance.

We described the emissions and we track them over time.

So that's the sequence we went through, if that is a

way of using the criteria going forward, and we described

that in Exhibit A-2-2.

MR. CROCKER: Following along then in the same vein,

where are the elements of environmental sustainability when

you applied the criterion of environmental performance?

MR. SHALABY: Where are the elements of environmental

sustainability? Well, identifying information, being

transparent about information is a requirement for

sustainability.


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So providing information in an open forum like this and

disclosure of information completely is in itself satisfying

a requirement of sustainability.

MR. PIETREWICZ: I think, more specifically, the

environmental performance results that describe the

scenarios considered are presented in Exhibit G-2-1. G-2-1

called -- under the plan performance section.

There you will find how the OPA tracked the variety of

environmental indicators associated with the operation or

simulated operation of each of these plans, and it includes

things that Mr. Shalaby referenced yesterday, including

greenhouse gasses, and waste, water use, radioactivity, and

particulate matters.

MR. SHALABY: Madam Chair is looking for the reference.

I think it is G-3-1 that has a performance indicator. I

didn't think I needed to correct it but if you are going to

go through the trouble, maybe we should.

MS. NOWINA: It is important to have it correct on the

record as well, Mr. Shalaby.

MR. SHALABY: The --

MR. CROCKER: If I could just follow up, with Mr.

Pietrewicz.

MR. SHALABY: Yes.

MR. CROCKER: How then did sustainability factor in to

the analysis of environmental performance?

MR. SHALABY: The socio-ecological system integrity is

about the -- whether the emissions and the rates of

consumption of resources, that is between that and the


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resource maintenance and efficiency. There are two

criteria, two requirements. One is socio-ecological system

integrity. One is resource maintenance and efficiency.

So the question is: Are the emissions and -- the

environmental emissions from, and lands use and water use

and airshed loading that is predicted over the next 20 years

consistent with socio-ecological system integrity, or not?

And the conclusion we have is that if emissions are

going down, that can only be a good thing. The -- most of

the emissions are going down. The only thing that is going

up is land use, and the thing that is staying steady is

radioactivity and water use for cooling.

So while we did not perform an assessment of -- socio-

ecologic assessment of the impact of the emissions, we

observed that the plan is taking most of the emissions down,

the air emissions, the mercury, the solid waste, is -- and

we identified that the land use is the element that is going

up during that plan, and we showed the feasibility of using

land for renewables and for transmission.

So if that helps, that is where the criterion comes in.

We note, as well, all of the environmental regulations --

this meets all of the environmental regulations. We note

that it meets government policy. So meeting government

policy, meeting all of the specific environmental

regulations, and trending down over time, these are all

three indicators of environmental performance that we think

is a good environmental performance of the plan.

MR. CROCKER: Okay. I am not going to follow this


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through to the last planning criteria, and I will -- I am

going to move on to another area, the last area I want to

talk about, so this may be a good time to break.

MS. NOWINA: It is. We will take a break now and

resume at 10:45.

--- Recess taken at 10:25 a.m.

--- On resuming at 10:45 a.m.


You may continue, Mr. Crocker.

MR. CROCKER: Thank you, Madam Chair, Members of the

Panel.

I would just like to complete the discussion in this

area, and then I have just two other areas briefly to

discuss with you.

I asked you questions sequentially, that is dealing

with each of these planning criteria sequentially which may

have encouraged you to answer this way, but I gather, from

your answers, that you did, in fact, apply the criteria

individually to the sustainability concepts. Is that

correct?

MR. SHALABY: Apply the criteria sequentially to the

sustainability concepts.

MR. PIETREWICZ: I think, Mr. Shalaby mentioned earlier

that the first two criteria of feasibility and reliability

were certainly sort of pass/fail type of criteria.

If the plan or the components of the plan under

consideration was not feasible, it wouldn't have been

considered.


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Similarly, reliability itself was, as your question

indicates, considered on its own, to answer the question: Is

this plan reliable? Or are these components reliable?

Then the other criteria, the other four criteria, for

example, cost, were considered both in terms of making

discretionary resource choices, those are choices that the

OPA has some discretion over.

For example, renewable choices, and that's described in

Exhibit D-5-1, or for example when deciding on the

incremental amount of base-load requirement to be supplied

by nuclear. That was a cost decision, an analysis made in

Exhibit D-3-1, attachment 1. So, yes, certainly cost was

one of those things that, where applicable, we did treat

individually, and then later on expressed the cost of the

plan itself in an exhibit G-2-1. Yes.

Flexibility, as well, was one of the criteria that we

used and it was treated more at a plan level. But there are

discussions throughout the evidence of whether flexibility

is a distinguishing criteria in making specific resource

choices.

MR. CROCKER: If I were to say to you that a more

traditional planning approach to the issue of -- issues such

as sustainability, particularly with respect to

sustainability, would be to apply all of the criteria to

each of the sustainability concepts, such as the ones

provided by Gibson, would you agree with that?

MR. SHALABY: The criteria are a practical guide that

is context specific.


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They are the way -- the tools that we will apply to

planning that will reflect and be consistent with

sustainability principles and requirements.

So that's the way you should look at the criteria.

The criteria alone, if we gave a system planner the

criteria alone, they will not know what to do with it.

If we give them, sorry, if we give them the

requirements, the eight requirements, if we give somebody

the requirements to be -- socio-ecological stability and

intragenerational equity and said: Design a system plan,

they will not know what to do with that. We had to

translate that into something they can do something with.

And that's a context-specific, something that relates

to electricity, to planning, to Ontario, to 2007, to the

government policy that we have today that we have to meet.

So that's the relationship between requirements and

criteria.

MR. CROCKER: Okay. I want you to go with me, briefly,

to C-10-1, please. I would like you to go to page 40.

MS. NOWINA: Mr. Crocker for the record, what document

is that? Is that one of the IPSP reports?

MR. CROCKER: I'm sorry. It's a discussion paper,

sustainability discussion paper, discussion paper 6.

MS. NOWINA: Thank you.

MR. SHALABY: What page?

MR. CROCKER: Page 40. I gather, from reading the

discussion paper, that SENES Environmental Consultants were

retained by the OPA, to do -- perhaps you can tell me,


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describe to me the retainer. What were they asked to do?

MR. SHALABY: They were generally asked to estimate the

environmental emissions that arise out of the various

electricity options that we are considering in the plan.

MR. CROCKER: So the last paragraph on page 40, you

say:

"While the terms of reference for the engagement

were extensive, SENES provided a raw score by

technology for the life cycle environmental impact

of each generation technology on each category."

Describe to me what that means, please.

MR. SHALABY: It's -- the raw score is -- hang on a

second.

MR. CROCKER: Just so you understand why I am asking

you this.

MR. SHALABY: Yes.

MR. CROCKER: I just want to understand what they did

for you, because they suggest on the first full paragraph on

the following page:

"SENES recommended a weighting scheme based on the

European Commission’s exhaustive study of the life

cycle impacts of different generation options."

And I wonder what that was and how, if at all, that

factored into, their recommendations factored into what the

OPA did.

MR. SHALABY: Thank you for elaborating the purpose.

SENES did two studies for us: One that we considered

in the supply mix advice, and this reference here is to the


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first study that SENES did. That is volume 4 of the supply

mix advice documents as correctly referenced here.

They then did a more detailed and more Ontario-specific

assessment on options, and that is part of the evidence in

G-3-1, it is an attachment to G-3-1. So SENES did two

pieces of work.

The first piece, in 2005, was built on international

experience, indicative numbers that are referenced in the

literature, and it had two dimensions to it that we did not

go into in as much detail in the latter phases. One was

life cycle assessment and the other one was the scoring

according to the health impacts, European Commission's study

of life cycle impacts.

So it was broader in scope, in that it was life cycle.

It assigned scores to air emissions, land use,

radioactivity, water use and so on, that permitted scoring

the environmental impact of an option against another

environmental impact of another option on a basis that could

be comparable in, numerically at least. So that is what the

first study was.

We moved on to more specific Ontario technology, more

specific technologies that will be used in the plan. So for

example the specific gas turbines, specific combustion

turbines, specific nuclear technology in Ontario rather than

the generic nuclear technology that was referenced in the

first phase. And so on. What we discovered was in the

second phase that the life cycle data was less available for

Ontario-specific options than it was internationally.


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We also concluded that the operational phase was more

compatible with mixing the new options with the existing

options and it was certainly the dominant environmental

impact for most options. So we did an alteration

methodology, as we went through.

MR. CROCKER: What was the scoring for, to tell you

what?

MR. SHALABY: If you adopted the scoring, if you

accepted that the scores determined or are indicative of the

health impact on population, then something with low score

would have less health impact than something with high

score.

MR. CROCKER: And was this kind of study considered by

the OPA when considering various options, the sustainability

issues with respect to various options?

MR. SHALABY: It was considered in the early stages of

developing vastly different scenarios in the supply mix

stage, so, for example, a case with a lot of natural gas, a

case with a lot of nuclear, a case with more renewables,

less renewables.

When all of the options were open in very large degree

of different mixes, we considered it at that stage. We did

not consider it when the decisions that were facing us were

very focussed, and the big decisions of how much gas, how

much renewables, how much conservation were already decided.

So we didn't consider it in the latter stages.

They were also controversial and did not meet with a

lot of consensus at the end of the day.


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MR. CROCKER: Okay. Let's go from there, then, to the

last sort of evolved -- to the last area I want to talk to

you about, and that deals with your slides 14 and 15 from

yesterday.

MR. SHALABY: Yes.

MR. CROCKER: You say in 14 that you did not

differentiate alternative choices for the planning

decisions, as all options comply with environmental

requirements.

MR. SHALABY: Yes.

MR. CROCKER: Okay. What environmental requirements

are you talking about?

MR. SHALABY: These are environmental protection

requirements, and government policies to do with greenhouse

gasses, for example, those would be examples of

environmental requirements.

MR. CROCKER: Okay. So just so that I am clear, you

equated -- let me ask you the question without suggesting

the answer.

Did you equate environmental compliance with the

requirement to consider environmental protection in

Regulation 424?

MR. SHALABY: Yes.

MR. CROCKER: And, also, just to be clear, there was

-- there were no differences on the basis of environmental

requirements among alternative choices?

MR. SHALABY: There are differences in the amount of

emissions, but the old environmental protection


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requirements, they are all environmental regulations and

requirements in Ontario.

So there were different -- we showed that a plan under

high load growth or a high conservation scenario would have

higher CO2 emissions or lower CO2 emissions. A plan with

delayed nuclear would have less radioactivity in a number of

years than others.

So they have different environmental emissions, but all

of them are well within regulations, environmental

protection regulations, and environmental policies of the

government.

MR. CROCKER: All right. I think I understand you now.

So you didn't prefer one that might have been better

environmentally to another, as long as both complied?

MR. SHALABY: We didn't know what "better

environmentally" means. If you are not allowed to trade one

emission for another, add a numerical value to one -- is use

of an acre of land better or worse than 2 kilograms of CO2?

We didn't know the answer to that, and for that reason you

couldn't trade them off.

MR. PIETREWICZ: Another specific example would be

something like comparing wind and water, which we do in

Exhibit D-5-1. Now, sort of intuitively one can imagine

that water would involve -- water power would involve

perhaps more water use, whereas wind power may involve more

land use.

They both comply with environmental requirements, but I

don't think we distinguished the water and wind on the basis


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of trading off water use versus land use.

MR. CROCKER: Okay, I understand.

The next slide you say, "By recognizing the" -- this is

the slide that deals with the social acceptance. You say:

"By recognizing the lack of specifics at the

planning stage that differentiate planning

decisions and focussing on acceptability of

broader plans..."

And then you say in the fourth bullet, "taking further

approvals into account."

These further approvals, are they environmental

assessment approvals, for instance? What are they?

MR. SHALABY: For example, yes.

MR. CROCKER: Are there others?

MR. SHALABY: There are municipal approvals or land use

approvals. There is Planning act approvals.

An electricity project is subject to a very long list

of requirements and approvals at the implementation stage.

MR. CROCKER: Okay. Then you say in the next bullet:

"Societal acceptance issues are identified, but

they did not differentiate alternative choices for

planning decisions."

Once again, I just want to understand what you mean.

You didn't -- no choices that you made were based on -- I

will ask it the other way around.

Societal acceptance didn't factor into or was not a

factor you considered when making choices within the plan?

MR. SHALABY: It's a factor we considered in developing


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the plan, but it did not differentiate a little more gas, a

little less gas, a little more conservation, a little less

conservation, because all of it was within government

directive.

All of the options and alternatives we discussed and

described for you in the plan, all of the eventual layout of

the plans, is within government direction. And government

direction and policy is a primary indication of societal

acceptance, as far as plans are concerned, in our

estimation.

So the way the plans developed, whether they developed

along the path of 2A or 3A or 4B or 1B, all of that was

considered acceptable, because it complies with government

directive, and because all of it will be subject to further

approval, and because all of it is done in an open and

transparent way and all of it is subject to the

comprehensive governance capability in Ontario for

environmental, labour, social matters.

MR. CROCKER: Thank you. Thank you, Madam Chair,

members of the Panel.

MS. NOWINA: Thank you, Mr. Crocker. That completes

Board Staff's cross-examination?

MS. LEA: Yes.

MS. NOWINA: Thank you. Mr. Poch, I believe GEC is up

next for cross-examination.

MR. POCH: Thank you, Madam Chair.

PROCEDURAL MATTERS:

MS. NOWINA: Before you begin, Mr. Poch --


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MR. POCH: I know where you are going, Madam Chair.

That is exactly where I am going.

MS. NOWINA: All right. I will let you go there first.

MR. POCH: I was going to say, Madam Chair, obviously

one could have an interesting discussion about regulatory

incentives, but these questions of controlling time and what

-- the incentives it gives for counsel and witnesses and so

on. I am very mindful of the concern you have raised.

I have -- frankly, my estimate is -- it is a simple --

I have very little idea how long this is going to take. My

sense from the cross-examination I have just heard is I may

be fairly accurate, because it does seem to be taking some

time to get things nailed down.

I would like to say, though, Madam Chair, I will in a

moment hand out a little outline of my cross, which let's

you know the topics I propose to cover, so I am also

cognizant of what you said about not getting into too much

detail on matters that we'll deal with later, because we

will inevitably then have repetition, which would be

undesirable.

I am going to ask my colleague, Mr. Millyard, to hand

up to you and to others a page, which is basically just the

table of contents to my cross-examination headings, so I can

lay before you what I am proposing to address with this

panel and hopefully respect that distinction.

It is, of course, a grey area, what's here and what is

there, but I should say my approach is that this is not just

an overview panel. This is the plan development panel, as


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well as the sustainability panel.

So I do propose to cover topics which have to do with

how, from a planning -- how the planning protocols dealt

with trade-offs between different options. When we get into

the details of how they have costed something, or what have

you, for a given option, I will try to place myself and

leave that for the subsequent panels, but it will be

necessary to pull some examples of how they have

differentially dealt with things, different kinds of

options, because that is a prime concern for us in terms of

the planning considerations.

I don't know -- do you have that in front of you now,

Madam Chair?

MS. NOWINA: Before we go into it, Mr. Poch, just so

others in the room know why Mr. Poch and I are having this

discussion. He has given us an estimate of 480 minutes for

this cross-examination, which is a fairly lengthy period of

time.

Mr. Poch, I am going to ask something of you. I would

ask you, tomorrow morning, after you have had the experience

of today's cross-examination, to give me another estimate

that is perhaps more realistic than the estimate that you

now have, because you will have the experience of today to

base it on.

MR. POCH: I will undertake to do my very best, Madam

Chair. Of course that will help others prepare and know

when they are up as well, apart from your need to keep

control of this process, which I sympathize with.


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If people have it in front of them, this table of

contents which I thought just might be helpful so people

could follow along and the Board would have a sense of how

the different questions fit into where I am headed. The

first point is, there is one title that didn't get updated

and it is item 1A should read, "Approvals sought: Scope and

discretion."

As you will see, I intend to touch on approvals sought

in effect of the update, much as Ms. Lea already has, and

hopefully not repeat too much then turn to sustainability

which I understand this is the primary panel for.

We want to talk about how the plan as a whole addresses

uncertainty, how the plan as a whole complies with some of

the specific directives. And then section 5, we want to do

what I was talking about a moment ago, which is just compare

and contrast how different options were dealt with, either

even-handedly or differentially, on a number of criteria.

I have a few matters -- I have given it a separate

heading just to try follow the issues list, but these are

perhaps more in the nature of just determining where we go

on these, that's a short piece.

Some questions on costing, and I won't be asking here

to get into any detail about what the costs are, just to

understand what went into the cost, what didn’t go into the

costs, and so on. Then a couple of wrap-up pieces on the

breadth of what's been done in the planning process. So I

hope that helps everyone follow along and apologies in

advance for this being so long.


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MS. NOWINA: Thank you, Mr. Poch. You might also keep

in mind we will break for lunch at 12:15.


MS. NOWINA: Yes, Mr. Vegh.

MR. VEGH: Thank you. This is the first I have seen of

this list. We have worked out arrangements with other

counsel and offered it to Mr. Poch as well that if they

would like to have a sidebar conversation about which panels

they should be cross-examining on which issues or which IRs,

we have spent time with them to help walk through that.

It's unfortunate we didn't get the opportunity here. I

will just sort of telegraph now as I quickly look at this

list, issues 5, 6, and 7, and 8, and 9 do seem to deal

extensively or do deal with issues that are extensively

addressed in the subsequent chapters.

So rather than raising an issue every time, a question

is raised that might be dealt with in more detail, the panel

may be in a position to do that as these questions do arise,

but it does look to me like there are detailed planning

decisions being addressed in these categories, in

particular.

And I just wanted to raise that now at the outset. I

don't want to spend all of the time during the cross-

examination standing up and objecting. But it could be at

the end of the day, as well, as you indicated and we have

more information, we could sit down with Mr. Poch and help

him direct some of these issues to the appropriate panels.

MS. NOWINA: Or even as early as lunch hour, perhaps


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you and Mr. Poch could have that discussion if you believe

it would be helpful.

MR. VEGH: I would be happy to do, Madam Chair.

MR. POCH: I thought we had that conversation when we

chatted briefly about this general question of these trade-

offs between options in a corridor discussion I had with Mr.

Vegh, but obviously he feels he can give me greater

direction, I am happy to listen to that.

Madam Chair, there will be four or five -- I think it

is five or six exhibits that I provided to my friends and

all of the parties and hopefully the Board got a couple of

days ago, I am wondering if we should just distribute them

now and as we get to the -- they're stapled in a bundle but

as we get to the particular ones, maybe we could assign them

numbers.

Does that make sense?

MS. NOWINA: Let's have them here. Are they already on

the record, Mr. Poch?

MR. POCH: They were sent out electronically Sunday

evening to everybody.

MS. LEA: They haven't been given an exhibit number

yet.

MS. NOWINA: We have them in the evidence already

before us?

MS. LEA: I will assign exhibit numbers.

Mr. Poch, what's an appropriate title for the bundle of

documents that we have?

MR. POCH: That's what I was just asking. Perhaps I


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should address this to you, Ms. Lea, which is your

preference for keeping track of things.

We could give it a single number, or it might -- I am

wondering if the record would be cleaner if we give

different items a separate number. It is up to you.

MS. LEA: The difficulty is, Mr. Poch if it is all

stapled together and it is all going to be submitted to one

panel, you might as well give it one number. Is it

paginated? No. Okay. So you will just have to guide us to

the appropriate part. I think that is easier than trying to

pull it all apart now.

MR. POCH: Let's call it cross-examination materials

-- GEC Pembina cross-examination materials on plan

development.

MS. LEA: GEC, I will leave it at that, if that's all

right, GEC cross-examination materials for plan development.

MR. POCH: Yes. Just as a consequence of what's

happened in the last few hours we have one more we would

like to add, which I didn't obviously distribute in advance,

but it is just a couple of pages off the OPA's website. So

I don't think there will be any problem.

MS. LEA: So I would like to begin then by giving that

first bundled of materials stapled together exhibit number

K2.1.

EXHIBIT NO. K2.1: GEC CROSS-EXAMINATION MATERIALS FOR

PLAN DEVELOPMENT

MS. LEA: And the OPA looks like a list of directives

and other --


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MR. POCH: That's correct.

MS. LEA: So ... just a moment, please.

List of directive and letters. Call it K2.2. List of

directives and letters.

MS. NOWINA: OPA list of...

MS. LEA: It has OPA on the title but the directives

are from the minister, so that will be Exhibit K2.2.

EXHIBIT NO. K2.2: LIST OF DIRECTIVE AND LETTERS

MS. LEA: Thank you, Mr. Poch.

CROSS-EXAMINATION BY MR. POCH:

MR. POCH: Thank you. Mr. Shalaby, perhaps I will

start with you. Just some general matters. I take it you,

I think, commented on your long involvement in system

planning. I take it you were actively involved in Ontario

Hydro's demand spot plan, the balance of power plan

development --

MR. SHALABY: Yes.

MR. POCH: -- back in the -- around 1990?

MR. SHALABY: Yes.

MR. POCH: What was your role in that?

MR. SHALABY: I was coordinator of the plan development

and plan review.

MR. POCH: So in a sense you were in charge of that

exercise, that planning exercise?

MR. SHALABY: Not the entire planning exercise, the

technical parts of it. The analytical and planning parts of

it, yes.

MR. POCH: And have you, in your work with Ontario


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Hydro, did you have involvement with the nuclear division at

any point in your career?

MR. SHALABY: No.

MR. POCH: No. I can't imagine why I thought that,

but...

MR. SHALABY: I had one rotation in design and

development, one rotation in research department. They were

-- I was at generating stations but I was not working on the

nuclear side.

MR. POCH: Let's turn then to the first area of scope,

and Ms. Lea covered with you -- you're asking for approval

for two gas plants for, in a sense, a transfer of

responsibility for Lennox from the IESO contracting to OPA

procuring; do I have that right?

MR. SHALABY: Yes.

MR. POCH: Could you just -- then you mentioned there

is some preparatory work on transmission. Can you just

explain what the nature of that approval is you are seeking?

It's not a facilities approval?

MR. SHALABY: Is this the development work on

transmission?

MR. POCH: Yes.

MR. SHALABY: The development work in transmission is

something that we're pointing out at this stage for

transmitters to start working on alternatives to meet that

requirement.

So we're not seeking approval for it. It's

transmitters that would be seeking approval for that, if


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they wish, in their own revenue requirements or in their own

hearings.

MR. POCH: You're not procuring anything with respect

to transmission?

MR. SHALABY: No, we're not.

MR. POCH: All right. You're seeking approval of that

aspect of the plan in the hope that that will assist Hydro

One and others obtain whatever approvals they need?

MR. SHALABY: We have two objectives, and that is to

point to the transmission that is likely to be required to

incorporate the renewables, in particular, and to have that

work started in good time to enable the rest of the plan

objectives to be achieved; and, in addition, the second

objective, that it will help others put their projects in

context for this, for whatever section 92 or other approvals

that they need, yes.

MR. POCH: You are not seeking any approval at this

time from this Board for -- to enable procurement of

combined heat and power; correct? I'm thinking of the

larger than 10 megawatt variety.

MR. SHALABY: We have a directive for 1,000 megawatts

and another directive for 100 megawatts combined heat and

power already. We are not seeking additional procurements

in that regard, yes.

MR. POCH: All right. Similarly for CDM?

MR. SHALABY: For conservation, we have directives on

conservation that will enable the targets for 2010 to be

met; that's correct.


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MR. POCH: Can we turn to that -- well, let me first

ask you this.

The -- is it your understanding that once this Board

has given you -- has approved a plan, whether a plan may or

may not be approved, then that's -- you're going to be going

forward -- other than the existing minister's directive,

that is going to be your authority for procurement and

action? You won't be able to have resort -- there won't be

any new minister's directives?

MR. SHALABY: I cannot speculate whether there will be

additional ministerial directives or not.

MR. POCH: Maybe this is a matter for me; I can discuss

it with Mr. Vegh and we can clarify that. It was my

interpretation of the act that that section of the act is no

longer in play.

MR. VEGH: Madam Chair, that is a legal issue. I am

not sure -- I am sure we will address it in argument,

perhaps. I am not sure if you want that addressed now. If

you would, I would be happy to comment on it.

MS. NOWINA: If you have some quick clarification, it

may help us, Mr. Vegh.

MR. VEGH: Okay.

The power of the minister to direct the OPA or to give

directives to the OPA to enter into procurement contracts is

in section 25.32(4) of the act. It's a transitional power.

I am trying to give you chapter and verse here. But,

in effect, the directive power authorizes the minister to

direct the OPA to enter into procurement contracts with


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respect to initiatives that have been commenced by the

Crown.

So if the Crown starts off the initiative, the

directive can then go to the OPA to continue with the

initiative and procure the power.

And the timing of this refers to initiatives that are

commenced prior to the approval of the first IPSP. So you

go to the timing of the initiative being commenced, and I

can -- I am just...

So if you look at -- the section, in particular, is

25.32(4). It addresses the transition. It says:

"The minister may direct the OPA to assume, as of

such date as the minister considers appropriate,

responsibility for exercising all powers and

performing all duties of the Crown, including

powers and duties to be exercised and performed

through an agency of the Crown (a) under an RFP,

or (b) under any contract..."

Sorry. Sorry, I'm looking at (1):

"...that was issued or pursued after January 1,

2004."

So this is describing the government initiatives:

"...and before the Board's first approval of the

OPA's procurement process under 25.31(4)."

So once the Board approves a procurement process, the

minister is no longer in a position to start initiatives

that are -- that then end up in OPA -- directions to the

OPA.


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But initiatives that take place prior to the approval

of the procurement process can still be subject to a

directive of the Crown.

MR. POCH: Thank you, Madam Chair. I don't think we

have to have any argument about that. It was helpful that

we got that on the record at this point, because it does

inform where we are going.

MS. NOWINA: Mr. Quesnelle has a question.

MR. QUESNELLE: I was wondering, Mr. Vegh, if you can

give your interpretation of what the start of an initiative

would be and what would be the delineation of that versus an

actual directive.

MR. VEGH: I think when you look at the directives,

they usually refer to the initiatives. So the directive

will say -- I don't have one in front of me, but the

directive will say: The government has commenced its

initiative to carry out X activity, and then will direct

the OPA to take over that initiative from a date going

forward.

MR. QUESNELLE: It's very clear, and it is public, as

to what that date is? As far as you could see, it's not

something that is a work in progress, so to speak, leading

up to a directive. It is actually the announcement that the

government will direct?

MR. VEGH: Well, it becomes -- the directive itself is

what identifies the government initiatives. So governments

don't typically announce initiatives that they are carrying

on. For the purposes of the OPA, they don't report to the


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OPA or, you know, to the OEB on initiatives that are

ongoing.

You find out that the government initiative is being

transferred to the OPA at the time of the directive. So the

directive identifies the initiative.

MR. QUESNELLE: Okay. Just the wording of it, though,

you mentioned the commencement of an initiative would -- as

long as it predates the approval of the procurement process.

So the -- as you are putting it, the -- as long as

there is a directive that predates the approval, the

government is obviously still within its authority to do so?

MR. VEGH: No. Sorry. As long as the initiative

predates the approval. So if the initiative is being

carried out any time before this Board first approves a

procurement process, then that initiative can be -- find its

way into a directive to the OPA from the government.

MR. QUESNELLE: I guess that is what I am looking for.

How is it clearly defined as to -- how is the public aware

that that initiative is occurring?

MR. VEGH: Well, I am not sure I could answer that in

the sense of providing a list of all current government

initiatives.

So the directive is very transparent, so the directive

is clear and on the record, but the initiatives that are now

being carried out, I am not sure that there is a public list

of initiatives. We know some are fairly high profile, but I

can't say that there aren't others that are not -- have less

profile.


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MR. QUESNELLE: Do you see that that raises any issues

with the Board's ability to understand what the environment

is that it is making its approval in the procurement?

MR. VEGH: I suppose, from the Board's perspective,

what the Board knows is that the OPA cannot, without a

government initiative, procure any resources that aren't

identified in the plan as resources that it wants to

procure.

There is political or a governance environment that we

all live in where the government does maintain that ability

to carry out its own initiatives. That basic ability to

carry out its initiatives is part of the common law of a

constitutional government. The executive can do that.

What this power does, what this legislative power does,

is allows the government to transfer that -- to transfer the

initiative to the OPA. So the legislation doesn't require

any greater publicity around government initiatives that

then occurred prior to the legislation.

So the legislation, I don't think it really tries to

constrain the government so much. It more tries to

constrain the OPA, to ensure that the OPA procurements are

being carried out in accordance with some governing

structure. The governing structure is either the government

itself, or the IPSP and the procurement process as approved

by the Board.

MR. QUESNELLE: Thank you.

MS. NOWINA: Mr. Poch.

MR. POCH: Thank you.


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So, Mr. Shalaby, I think we can agree, then, that apart

from any initiatives that the government has already

instituted and that it belatedly directs you to do, once

this Board issues its decision, assuming the plan is

approved in some form, your expectation is that you are

going to obtain your authority from the existing directives

and the many – that’s several dozen or two existing

directives, specific directives, and from the Board's

specific approvals and procurement process approval that you

are seeking?

MR. SHALABY: That's correct.

MR. POCH: Okay.

I am cognizant -- Madam Chair, you wanted to break at

12:15?

MS. NOWINA: 12:15.

MR. POCH: Fine. Let's look at that Exhibit K2.2,

which is the list of directives. I would just ask you to

confirm for me my understanding. I think you already

indicated that for combined heat and power, the directives

today are 1,000 megawatts plus another 100 megawatts. 1,100

megawatts; is that right? You don't have to find them. I

think the 100 is at April 10th, 2008.

MR. SHALABY: Yes, I can see the 100 on April 10th,

yes. The minute you say, You don't have to find them, that

is a sign for me to try to find them. I took that in

witness school, too.

MR. POCH: I was...

MR. SHALABY: April 10th is the CHP 3, we call it.


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MR. POCH: April 10th of...

MR. SHALABY: And the other CHP is ahead of that. I

don't know the date of that.

MR. POCH: What I am going to suggest is that at some

point, I would just like it to be appropriate to get

clarified where these authorities are. I don't need it

right this moment on CHP.

If you could just help me find that, where the 1,000

is, that would be appropriate. If you want to take that

away and we will cover it later and come back to it later,

that would be great.

MS. LEA: Can I recommend, even if it remains within

this panel, that we list it as an undertaking?

MR. POCH: Sure, let get an undertaking to identify --

MR. SHALABY: June 15th, 2005. It's the third

initiative list of minister's directives to OPA.

MR. POCH: That's 1,000 megawatts.

MR. SHALABY: That has high efficiency heat and power

at the end of it.

MR. POCH: Thank you. I wanted to then look at the

conservation directives, and I can help you here. I have

done a little bit of this myself.

I have identified 1,000 megawatts of specific

directives with respect to conservation. And they are the

October 6th, 2005 for 100 megawatts. I am just going to put

these on the record and then ask you to accept it subject to

check. How is that? Take an undertaking?

MR. SHALABY: As a later time we will do that?


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MR. POCH: You don't need to check right now. When I

am finished with this, I will ask for an undertaking that

you just confirm that we have covered them.

MR. SHALABY: Right.

MR. POCH: My information is October 6th, 2005, 100

megawatts -–

MR. SHALABY: The record has an interrogatory response,

all of the directives and conservation.

MR. POCH: Ah, can you point us to that?

MR. SHALABY: Maybe we can find that. The only thing

missing is what number it is and who asked it.

MS. NOWINA: Mr. Poch, it might be most helpful to go

ahead with your -- you go through it, subject to check, I am

sure that today sometime the OPA can check it and confirm

it.

MR. POCH: Thank you, Madam Chair. Let's proceed on

the assumption that I have done the math right. There is

1,000 megawatts that I found of conservation directives in

addition to the $400 million budget permission directive for

you to engage local distribution companies to deliver

conservation.

MR. SHALABY: I just want to take a minute to

understand whether those directives include customer-based

generation, for example, that is also considered

conservation.

So the RESOP directive or program is -- captures

resources that aren't classified as conservation. So what

you are mentioning may not be all the capturing capability


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for conservation.

MR. POCH: Okay.

MR. SHALABY: Conservation is also enabled by many

other programs other than OPA programs but -- I don't know

where you are heading with all of this, but --

MR. POCH: I am just going to ask for an undertaking

rather than spending a lot of time dancing around. I think

it might be a little easier.

Perhaps we could get you -- get an undertaking that OPA

will provide a list of the directives that are existing that

authorize it to procure conservation. Is that acceptable?

MR. SHALABY: Yes.

MS. LEA: List of existing directives that authorize

conservation procurement, Undertaking J2.1.

UNDERTAKING NO. J2.1: TO PROVIDE A LIST OF EXISTING

DIRECTIVES THAT AUTHORIZE CONSERVATION PROCUREMENT

MR. POCH: Mr. Shalaby, perhaps you could remind us.

What's the expected or the hoped-for conservation goal by

2010?

MR. SHALABY: 1,350 megawatts --

MR. POCH: Right.

MR. SHALABY: -- in addition to the 2007 target.

MR. POCH: Right. Some of these directives would have

been with respect to conservation that was for the 2007

target?

MR. SHALABY: Well...

MR. POCH: The 2007 target was also 1,350?

MR. SHALABY: It was. So the cumulative target for


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2010 is 2,700 megawatts?

MR. SHALABY: If you add 1,350 and 1,350, that becomes

2,700, yes.

MR. POCH: All right. Thank you.

MR. SHALABY: The first 1,350 was dealt with in a way

different than the next 1,350. The first 1,350 was largely

underway before the inception of the OPA and before the

programs of the OPA. Again, I don't know what your purpose

of asking this, so --

MR. POCH: I will try to help you with that.

Throughout the evidence, you have repeatedly said, Our

plan includes the amounts that are in the -- the minimums

for conservation that are in the -- the minimums for

conservation that are in the directives, these benchmarks

for particular years, 2012 and 2025, I believe.

But you have insisted that if you can get more, you

will get more.

MR. SHALABY: Yes.

MR. POCH: Am I right? Sorry?

MR. SHALABY: Yes.

MR. POCH: And I just want to make clear that there is

a caveat on that, is there not, that you can only procure

more if you have either obtained ministerial directives, as

in the manner we have spoken of, or if it is included in

this plan and you asked this Board for authority to procure

more.

MR. SHALABY: Or we come in the next plan and ask for

additional authority. Yes. That's the update feature that


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we talked about and is an integral part of how much

approvals we ask for.

MR. POCH: And realistically, you're not going to get

through another cycle of this and get the Board's next

approval for at least a couple years?

MR. SHALABY: You couldn't determine how long your

cross-examination will be today. I mean, you want me to

speculate, go that far out? Let's be fair.

MR. POCH: That was an excellent answer, even if it

wasn't the one they taught you at witness school. But we're

talking a good couple of years down the road, obviously.

MR. SHALABY: Yes.

MR. POCH: So --

MR. SHALABY: It doesn't prevent us from come for

interim approvals. I mean there are all kinds of ways of

-- if things are necessary between plans but let's assume

they come in in a couple of years, yes.

MR. POCH: I am just suggesting to you, though, that

you really don't have a lot of head room, do you, on

conservation? You've got, if I am right, 1,000 megawatts,

plus the 400 million and you've got to get 2,700 megawatts.

You've got 2,700 megawatts.

You don't have a lot of head room, in terms of the

approvals you have, to exceed that.

MR. SHALABY: That's not true, because the attainment

of conservation, first of all the RESOP contributes

conservation. That's another source of megawatts that can

be conservation.


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Many of the contributions of conservation are going to

come through standards and codes. Those do not require

authority to spend OPA money. These are government

standards and approvals.

Many programs are carried out by a large number of

partners in the business, the local distributing utilities

that are here. They are strong advocates of conservation

and they do achieve under their own spending -- which is the

400 million that you talked about, and their own resources.

The federal government has programs. There are many

avenues of getting conservation other than the OPA authority

to spend dollars under those directives.

MR. POCH: All right.

MR. SHALABY: So that's -- particularly standards and

codes, particularly the federal government initiatives, and

particularly the RESOP.

MR. POCH: So you have given me that list of where you

think all of this conservation can come from. Have you made

estimates of all of that conservation and included it in

your load forecast?

MR. SHALABY: I would defer that to the load

forecasting and conservation panel how exactly they

considered all of that.

MR. POCH: All right, fair enough.

With respect to combined heat and power, I think you

have indicated that we're a little more certain about, about

1,100 megawatts of -- authority?

MR. SHALABY: Yes.


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MR. POCH: And I take it there is less opportunity for

a lot of it to show up through other means than there is

with conservation?

MR. SHALABY: Many of these projects get developed by

customers on their own, at least historically. A large

number of combined heat and power projects are developed for

other purposes other than selling electricity through the

grid, but I would accept your premise that the new projects

are going to be developed under -- correct.

MR. POCH: Let me turn to Exhibit A-2-2, page 7.

MR. SHALABY: Are you going to put the exhibit up?

MR. POCH: Now, first of all, this is the section of

the evidence where there is a discourse on the OPA's view of

what this Board should and should not give direction on,

where it should show deference.

Is this the right panel to ask questions to about that?

MR. SHALABY: If it doesn't become a legal question, we

will attempt to answer.

MR. POCH: I just saw you put in evidence, so I wanted

to ask questions about the evidence.

MR. SHALABY: If the evidence is of a legal nature, I

will have limitations in answering.

MR. POCH: Who wrote this exhibit?

MR. VEGH: Sorry, just to be clear, Madam Chair, this

is in section A of the application, which is the

administrative section. The evidence section of the

application starts in section B and onwards. Just a

clarification, I think Mr. Poch was calling this evidence


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and this is more of an overview document.

MS. NOWINA: So it is not evidence?

MR. VEGH: It is not evidence.

MR. POCH: Thank you. So then what is this? This is

-- perhaps Mr. Vegh can clarify.

Is this an opening statement? Is this a submission of

counsel? I would like to know what it is so we could

respond accordingly.

MR. VEGH: This is a document that was meant to provide

context and a description of the mandate of the OPA and the

OPA's view of the nature of the review of the IPSP.

It was thought that this would be a helpful outline for

parties, given this is the first IPSP, and these are some

the more fundamental issues that do arise, but there is

obviously a lot of legal issues in here that I expect will

be addressed in legal argument.

MR. POCH: Can I take this, then, as a submission of

counsel?

MR. VEGH: Well, it's a bit of a hybrid. I would take

it as an administrative document that sets out the scope of

the OPA's mandate and the OPA's view of the scope of the

OEB's mandate.

I am not sure what -- I think a lot of these issues

will be addressed in legal submissions, but I am not sure

what Mr. Poch is asking me to concede to by saying we will

treat this as submissions of counsel.

MR. POCH: I think that is fine, Madam Chair. I think

my friend has already indicated it is not evidence, and so


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presumably no weight is attaching to it at this point. I

can just simply move on, then.

Now, could you turn to I-22-176? Here we asked you two

questions about a number of items, one, whether you view

them as to be within your planning discretion, and then,

secondly, we did ask you, twigged by the earlier discussion

we just had here, about whether or not you thought it

appropriate for this to be an area where the OEB ought to

give direction.

So I won't ask you, Mr. Shalaby, to give any legal

opinion on that, but just more your understanding of what's

being sought of the Board here in a less formal way, which

may be helpful in response to that.

Now, there is a list there of various points. I didn't

really get an answer, other than to say, Go to the issues

list.

So perhaps we can just take them quickly one at a time.

Definition of base load, is that something you view as

within your discretion, your planning discretion?

MR. SHALABY: You are going through the list that is in

the question?

MR. POCH: Yes.

MR. SHALABY: Yes.

MR. POCH: All right. And are you seeking any

assistance from the Board in that regard, any direction?

MR. SHALABY: When we're -- we described the totality

of our work as a methodology, a planning methodology, that

is here for consideration by the Board.


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MR. POCH: All right. That is part of it?

MR. SHALABY: That is part of it.

MR. POCH: All right. So that's before the Board for

their deliberations; correct?

MR. SHALABY: It is.

MR. POCH: All right. I take it using less than 14,000

megawatts is within -- to some extent, within your

discretion?

MR. SHALABY: Yes.

MR. POCH: All right. We are going to come back to

that. Obviously, it is affected by recent events.

Now, the choice of whether or not to use local avoided

costs for areas where conservation would have a higher

value, and therefore increase its savings potential, is that

something in your planning discretion?

MR. SHALABY: It is in program implementation, and the

conservation panel can address that.

MR. POCH: All right. Is it something that you viewed

when you were developing this plan, the choice of whether to

develop a plan that looked at the potential in particular

pockets of the province where there is particular concern?

Is that -- that was within your discretion, whether to

address that or not?

MR. SHALABY: It is. It is. And we did address it by

assigning avoided costs of transmission and distribution and

losses, yes.

MR. POCH: All right. Did you allocate those avoided

costs to local areas to give a different avoided cost for


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specific --

MR. SHALABY: Not to that level of detail at the

generic tables, no.

MR. POCH: Okay, thank you.

The choice of which resources are treated as avoidable

within avoided costs calculation, I take it that is

something that is within your planning discretion?

MR. SHALABY: We're explicit about what it is that we

include as avoided, yes.

MR. POCH: It's a choice you make?

MR. SHALABY: We made the assumptions.

MR. POCH: It's a choice you are making?

MR. SHALABY: It's a set of assumptions, because it is,

What would we have done had conservation not been here?

So it is not a planning decision. It is an assumption

of what else would displace conservation.

MR. POCH: We will come back to the details of that

with your --

MR. SHALABY: It is, again, methodology.

MR. POCH: Okay. If I want to come back to the details

of that, that would be the conservation panel?

MR. SHALABY: Yes. That evidence is an attachment to

D-3-1.

MR. POCH: Okay.

MR. SHALABY: D-4-1.

MR. POCH: The choice to utilize larger co-gen, CHP, as

an option for intermediate and base load, that was something

-- that's something in your planning discretion?


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MR. SHALABY: To utilize larger co-gen as a resource

option for intermediate or base load? Yes.

MR. POCH: All right. That is something you would

appreciate direction from the Board on, is it?

MR. SHALABY: Whether the, again, the methodology for

assessment of that potential and the assessment of its

feasibility --

MR. POCH: Okay.

MR. SHALABY: -- and it's economics, all of that is

explicit and we present the data.

MR. POCH: We will come back to that methodology later.

The consideration of whether to obtain imports from

neighbouring jurisdictions, and whether or not to seek, to

go after interconnection upgrades. That's something that

you felt was within your planning discretion?

MR. SHALABY: Consideration of imports is your

question, and that is part of what the OPA does and part of

their planning considerations, yes. Consider imports.

MR. POCH: All right, okay.

I take it obviously alternatives for base load, firming

of renewables or for peaking is something that is within

your discretion.

MR. SHALABY: Yes.

MR. POCH: I guess there is no debate, you have

discretion to go beyond the minimums in the directives for

CDM and renewables?

MR. SHALABY: Yes.

MR. POCH: It was within your discretion to choose a


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plan that costs a bit more but would have fewer

environmental impacts or be otherwise more sustainability?

MR. SHALABY: Subject to you defining what fewer

environmental impacts and more sustainability is.

MR. POCH: Well, it was within your discretion to

define that and pursue that if you so chose.

MR. SHALABY: No. We didn't know what -- how -- I mean

we agreed with stakeholders that trading environmental

impacts is subjective matters.

MR. POCH: We will come back to that.

MR. SHALABY: All of the options have environmental

impacts.

MR. POCH: We will come back to that point. You chose

to agree with whatever stakeholder gave you that opinion.

That was your planning discretion.

MR. SHALABY: That was our planning discretion.

MR. POCH: You had discretion to do it another way.

You may have felt your hands were tied because you didn't

have the knowledge or tools, but you had that discretion.

MR. SHALABY: Right, right.


Obviously, you’ve already said your methodology

therefore, I take it, the assumptions, how you decided to

cost various options, obviously that is within your

discretion, I take it there is no contest there?

MR. SHALABY: Yes.

MR. POCH: The choice to count particular externalities

in plan development and selection, whether or not you


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monetized them, I take it that was within your discretion?

MR. SHALABY: If that means identification of

environmental factors to track?

MR. POCH: It could be environmental or other

externalities.

MR. SHALABY: What would an example of that be?

MR. POCH: Job creation, transference of risk, impacts

on society more broadly.

MR. SHALABY: We tracked a number of environmental

factors and chose not to do other factors that you are

talking about, yes.

MR. POCH: Right. So it was your -- it was in your

discretion, as to whether or not to both track but also to

include in your planning process externalities of the

various kinds that are potentially out there.

MR. SHALABY: Well, subject to our mandate as well. I

mean, the mandate of the OPA is not -- is not into some of

the factors that you are talking about.

MR. POCH: Well, I guess that is really what I'm asking

for. What did you feel is, you could have if you – again,

you might not have felt you had the tools at hand or you may

have not felt it was wise. But you had the discretion.

Was there some counting of externalities, is there some

constraint on you in that regard that I am unaware of? Can

you help us?

MR. SHALABY: Not knowing exactly what externalities

you're talking about, I mean, is it balance of trade for

Canadian products, is it --


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MR. POCH: I think I gave you a couple --

MR. SHALABY: -- regional job development?

MR. POCH: I gave you two examples. Consideration of

job impacts in the province, consideration of transfer of

risks, creation of risks for -- an accounting of those risks

for either the financial community or the physical

community.

MR. SHALABY: We did not explicitly consider jobs, and

the creation of jobs.

The question on risks, I don't understand fully.

MR. POCH: But those were your choices not to consider

that.

MR. SHALABY: Yes.

MR. POCH: There was not a constraint that said you

can't look at those things and count them if you so choose.

MR. SHALABY: Well, a combination of our mandate and

the value added we can bring to bear, yes.

MR. POCH: All right. Thank you.

All right, let's move ahead and talk about the effect

of the update.

Prior to the August 29th update filing, you had

answered, in answer to -- I will ask you to turn this up I-

22-87, at page 3, lines 31 to 37 is I think where you cover

this.

MR. SHALABY: Can we see what the question is to start?

MR. POCH: Sure.

MR. SHALABY: This is --

MR. POCH: This is a long question where we asked you


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about various aspects of nuclear costs and cost trends.

MR. SHALABY: Yes, we got it.

MR. POCH: Right. In that answer, you noted the

government's statement about pursuing an RFP for some -- the

potential new nuclear capacity at Darlington, and statement

with respect to what they foresaw for Bruce, the Bruce site.

And you cited the Board's earlier comments about the

expectation that nuclear power is obviously going to be a

matter of some provincial policy.

And I notice you were relying on that statement and

that statement said, What this proceeding can thoroughly

examine are the base-load requirements that drive the need

for nuclear development and the flexibility of the plan to

react to situations that alter the assumptions regarding the

need for and execution of nuclear projects.

I want to suggest that, now contrast what you cited

there by way of explanation as to what you thought the --

was on the table here was, with what you are now saying and

then ask your comments.

If you would turn to, if we turn to B-1-1, at page 4,

you now -- this is the last paragraph, page 4, line 11. It

is the updated, the August 29th update.

That paragraph recites the Board's comments about the

-- it wasn't going to review matters that were already the

subject of OPA procurement prescribed by ministerial

directive. And then said, as a result, the existing and

committed resources aren't subject to review. And you have

gone on.


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I think I can paraphrase the position you have taken

here in the hearing is to say -- you're now saying that the

recent announcements by government amount to -- you are

trying to shelter under that wording, you are trying to say

those amount to the same as the subject, being subject to

government procurement or OPA procurement, correct, and

therefore you are treating them as committed?

MR. SHALABY: So the question is?

MR. POCH: Have I understood you correctly? The

nuclear capacity in that announcement, you're saying it is

committed. It is off the table in this case for review.

MR. SHALABY: I described the purpose of putting the

categories of -- under government directive or pursued

directly by government or pursued directly by OPA. All of

that is to focus the scope of the decisions that are left to

the planning discretion of this hearing. So it is off the

table, in the sense of it is not a set of decisions that we

are addressing in the plan at this time.

MR. POCH: All right. I will come back to that in a

minute.

MR. SHALABY: In the slides I presented yesterday, it

is focussed on what remains as discretionary, rather than

what's below the line. What's below the line is being

pursued elsewhere, and we don't think it is productive to

pursue something being pursued elsewhere.

MR. POCH: You're not taking the position that it is

-- the Board's not allowed to review that. It is just you

think it is not productive, not a good use of our time and


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the Board's time?

MR. SHALABY: For the planning decisions that we have

discretion to pursue, it is the light green part of the bar

chart, not the dark green or the blue, yes.

MR. POCH: Right. With respect to -- I think called it

dark green. That is what you call committed; right?

MR. SHALABY: That's right.

MR. POCH: With respect to the committed resources that

are the subject of that government letter or announcement or

press release, or whatever it was, but that aren't, you

know, contracted for --


MR. POCH: -- you're saying it is not that the Board

can't review that, but it shouldn't?

MR. SHALABY: I mean, the Board will decide what it is

it wishes to review.

MR. POCH: Okay. Now, just in terms of the update, the

committed CDM and renewable capacity in your plan has

augmented by planned amounts and the combination of the two

adds up to the directive minimums in both cases; correct?

MR. SHALABY: It this -- for what year?

MR. POCH: For the end of plan, 2027 or whenever the

directive -- 2025, when whenever the directive --

MR. SHALABY: It is the directive. The directive

doesn't have minimum or maximum. It has an amount and we

meet that amount.

MR. POCH: Right. And it's the sum of committed -- in

those cases, conservation, CDM and renewable capacity, the


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sum of capacity and planned adds up to that minimum or adds

up to --

MR. SHALABY: Committed and planned.

MR. POCH: Committed and planned adds up to the

directive minimum?

MR. SHALABY: The target.

MR. POCH: The target, which is the minimums in the

directive?

MR. SHALABY: It's a target. It doesn't say minimum.

It says, You will achieve a target of...

MR. POCH: You are agreeing you can exceed those

targets?

MR. SHALABY: Yes. You are calling them a minimum.

I'm calling them a target.

MR. POCH: Let me ask you, then. Do you take the view

that your job is not very clear from the directive that you

are obliged to go and do your best to achieve that?

MR. SHALABY: To achieve the target, yes.

MR. POCH: Yes.

MR. SHALABY: Yes.

MR. POCH: That was your marching orders?

MR. SHALABY: That's the target.

MR. POCH: Okay. So the megawatts in the CDM and

renewables totals haven't changed with the issuance of

ministerial procurement directives? I'm not speaking --

they still only, in all -- they continue -- as the green,

the light green and dark green, might shift around, the

height of that histogram is always at the target?


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MR. SHALABY: For renewables and CDM?

MR. POCH: Renewables and CDM.

MR. SHALABY: The update did not affect the achievement

of targets into 2025, yes.

MR. POCH: Right. Over time, what is in planned and

what is committed has changed, as a new directive issue, for

example, correct, but the total doesn't change?

MR. SHALABY: What is committed eats up from what is

planned; that's correct.

MR. POCH: Right. The mandatory amount, if I can use

that word -- I am equating the target in the supply plan --

supply directive as a mandatory amount. Obviously, if you

can't do it, you won't do it, but that's not changed?

MR. SHALABY: The directive did not change and the

amounts in the directive did not change.

MR. POCH: Right. What I am leading towards here is

what is avoidable, and we will get to that, but in terms of

your planning discretion, whether it's in committed or

planned, it doesn't really matter. It's your -- in terms of

your planning discretion, your plan is -- you know, shall be

designed to achieve that target or exceed it?

MR. SHALABY: Right, correct.

MR. POCH: Okay.

But in the case of this recent change with nuclear,

you're interpreting the effect of the potential capacity in

the government's RFP process as moving capacity from the

non-mandatory planned category to the mandatory committed

category, correct, in terms of your planning?


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MR. SHALABY: I am not sure what mandatory and non-

mandatory is. I mean, these are terms we haven't defined.

MR. POCH: When it was in planned, it is avoidable.

When it is in committed, you are treating it as not

avoidable.

MR. PIETREWICZ: If I could just chime in here, the

total amount of nuclear to meet base-load requirements in

the directive has not changed. It was up to 14,000

megawatts in the directive, and it continues to be up to

14,000 megawatts.

The update that the OPA filed to B-1-1 sees no change

in absolute or total installed nuclear capacity relative to

the prefiled evidence of August 2007.

What has changed or what is reflected in the update is,

as you point out, an increased amount of committed nuclear,

and, therefore, a smaller requirement for planned nuclear

power.

MR. POCH: All right. In terms of how you interpret

your planning mission, am I correct you are interpreting

that as meaning, before the up to 14,000 was just what it

said, up to -- it was permissive up to that amount. You

could come in with a plan of less than 14,000; correct?

MR. PIETREWICZ: Yes.

MR. POCH: If you got a bunch of CDM, if you were more

confident about CDM, you would have included more CDM and

maybe less nuclear; correct?

MR. SHALABY: History demonstrates that.

MR. POCH: Right. Now, before, you could back off


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nuclear to the point where you ran into the Bruce A contract

commitment. That really was committed?

MR. PIETREWICZ: Yes. In the original filing, the

committed nuclear was represented by the roughly 3,000

megawatts at the Bruce A facility.

MR. POCH: And now you take the view - correct me if

I'm wrong - that you can't back out nuclear below, what is

it, 10,000?

MR. SHALABY: Well, backing out nuclear, what does that

mean? I mean, we're not requesting a --

MR. POCH: I am asking about planning discretion,

whether you choose to go that route or not. You are

interpreting the government's announcement as saying, You

will include, as committed and not as avoidable the -- what

is it, the ten thousand and three hundred and -- sorry,

the --

MR. PIETREWICZ: In the case of --

MR. POCH: -- 10,249?

MR. PIETREWICZ: It is actually up to 9,800 megawatts,

or so.

MR. POCH: Excuse me, 9,800 megawatts.

MR. SHALABY: So the question is?

[Witness panel confers]

MR. POCH: Let me put it this way. You are treating

that announcement as if the directive now reads, No more

than 14,000 and no less than 9,800?

MR. SHALABY: No. You are giving --

MR. POCH: If I am overstating it, please tell me.


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MR. SHALABY: You are overstating it. The directive

doesn't say that.

MR. POCH: Okay. Tell me, first of all, where I am

wrong on the directive.

MR. SHALABY: Well, the directive doesn't say no more

than and no less than. It just says no more than. The

directive has not changed.

MR. POCH: I wasn't suggesting the directive had

changed. I was using --

MR. SHALABY: I don't know where you are going with all

of this, so I'm just being careful. That's all.

MR. POCH: I am asking how you are treating this new

information. You are treating it as having the same effect

as if the directive had changed in terms of your planning,

in terms of what you feel you have discretion to do or

avoid?

MR. SHALABY: At this time, yes.

MR. POCH: At this time?

MR. SHALABY: Yes. We're focussing on the resources

that are yet to be planned, and we're providing ways of

enabling and ways of options to meet the remaining

requirements above what others are working on, yes.

MR. POCH: But my statement to you that you are

treating a government announcement as, in effect, creating a

minimum, that's now 9,800 for nuclear. I am accurate there?

MR. SHALABY: We are treating the announcement as

committed, yes. Not all of the committed things that we're

saying are -- in the category of committed are going to


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materialize exactly as planned or as foreseen.

MR. POCH: Events can intervene, obviously, but in

terms of what you --

MR. SHALABY: Success rate will intervene. There are

many things that will intervene. We are just saying we

don't need to make -- to develop options to meet that.

There are options now to meet that portion of the graph,

let's develop options to meet the other remaining options of

the graph. It is more productive to work on the void space

than the space that is already occupied.

MR. POCH: You are taking that -- as you say, that

space is occupied. You are taking that as a reduction in

your discretion. It may not affect anything in your plan,

but it is a reduction in -- your viewing it as in effect a

reduction on your discretion?

MR. SHALABY: We indicated that we want to develop

options for Ontario to meet its needs going forward.

Somebody else is developing options to meet that portion of

the requirements. We're developing options to meet the

remaining portion of the requirements.

So again, not knowing what turns on all of this, I

don't know what to accept and what not to accept in what you

say.

MR. POCH: Don't worry about where I am going, Mr.

Shalaby, just listen to my question and answer that.


MR. POCH: All right. Simply put -- I am not going to

beat that one to death. I think we understand your


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position. Can we agree, beyond Bruce A, there are no

contracts to procure nuclear?

MR. SHALABY: There are no contracts to procure those

two nuclear commitments that are indicated, yes.

MR. POCH: There is no directive to you to procure?

MR. SHALABY: No directive, no.

MR. POCH: All right. And the government is not

obligated to procure, as far as you know?

MR. SHALABY: Not obligated.

MR. POCH: All right. And the government doesn't even

have a price quote yet, does it?

MR. SHALABY: They're discovering that through the

process.

MR. POCH: Exactly.

MR. SHALABY: That's one of the main advantages of this

process.

MR. POCH: Presumably one of the primary purposes of

the process; correct?

MR. SHALABY: Yes.

MR. POCH: Yes. And so do you think that the

government's announcement -- are you taking that to read the

government's going to procure this nuclear regardless of the

price?

MR. SHALABY: I can't speculate on that.

MR. POCH: Okay. Let's turn to the...

I am going to just turn to the figure 16 in I guess

this is B-1-1 updated, page 6. I'm sorry, it is not

page 6. It is page 34. Here you have provided the update,


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rather the correction adds the numbers in table 6, below

figure 16. Correct?

Can you just label that for us. What year is the --

are these numbers representing?

MR. PIETREWICZ: They are meant to represent the year

2027.

MR. POCH: Okay. Am I correct that this, these are the

-- these stacks of resources are -- would be associated with

case 1A?

MR. PIETREWICZ: Yes, I believe that is true.

MR. POCH: And that's where the assumption is that

Pickering B gets refurbished?

MR. PIETREWICZ: Yes. That is case 1A, is based on the

assumption that Pickering B is refurbished. Not on our

assumption.

MR. POCH: Where I am going to go next is to take you

through the...

MR. SHALABY: Just a minute.


MS. NOWINA: Mr. Poch, it's our lunch break time. How

much longer do you think you will take with this?

MR. POCH: This is a convenient point to break, sure.

MS. NOWINA: Good time to break? We'll get an answer

to the question, this question, and then we will break?

MR. POCH: I was just going to say, by way of

introduction, where I am going and maybe I will take say it

so the witnesses can contemplate it over the break if it’s

in the back of their heads. I am just going to take them


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through that stack and ask, in each case, what is avoidable.

MS. NOWINA: All right. Why don't we do that after our

lunch break. We will break now for lunch and we will resume

at 1:45.

--- Luncheon recess taken at 12:14 p.m.

--- Upon resuming at 1:47 p.m.


Did any matters come up during the break? Mr. Poch,

are you ready to continue?

MR. POCH: I am. Thank you, Madam Chair.

Panel, just before the break we were just looking at B-

1-1, page 34, where you have the before and after stacks of

committed and planned resources, and you have it broken down

in a table with numbers on it. I was going to take you now,

just to ask you in each category what is avoidable.

I think we have already really dealt with the

conservation and renewable, in the sense that your plan is

at the minimum or targets in the directive. So it's not

intended that it be avoidable, let's put it that way; is

that fair?

MR. SHALABY: Okay, yes.

MR. POCH: Okay. So let's turn to gas. Can you just

explain, under...

Right. I have summed for gas existing, committed and

planned, and the numbers -- you can take them subject to

check, but the numbers move from 10,208 to 10,071. I am

wondering if you can just explain that drop that I -- at

least my math gives me.


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MR. PIETREWICZ: I can venture to explain that drop.

I will be using roughly rounded numbers, but the drop

is a result of a couple of things.

The first is that in the initial filing there were 63

megawatts that had been procured under the CHP 1 procurement

that were erroneously identified as gas, whereas in

actuality they are biomass. This is a 63 megawatt Algoma

combined heat and power project. So that is one explanation

for the difference.

MS. NOWINA: Can I stop you for a moment, sir, and ask

if people can hear you? Can people hear Mr. Pietrewicz at

the back of the room? Yes? Good. Thank you.

MR. PIETREWICZ: Thank you.

That is one difference.

Another difference that I recall relates to the CHP 2

procurement, which, as we have identified earlier, is for up

to 500 megawatts of combined heat and power, and that is

reflected in the update as gas.

It could very well be that not all of it turns out to

be gas, but for purposes of this update for planning

assumptions, we've assumed that it could be all gas, 500

megawatts.

In the initial filing, the quantity was 586 megawatts,

the rationale being that the directive had been to procure

up to 1,000 megawatts of CHP. We had, in the CHP 1,

procured 414 megawatts. So that simply left 586 megawatts

remaining.

However, as reflected in the IPSP update, in this


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Exhibit B-1-1, we have now -- the OPA has a procurement

process under way to procure up to 500 megawatts. So it's

that 500 megawatts that is reflected in the update, rather

than the 586 which was just our sort of arithmetic estimate

of the balance.

So I believe those two factors should be the bulk of

the explanation.

MR. POCH: So let me just understand. CHP 2 on its

face is -- your directive is 500 megawatts?


MR. POCH: The 414 was being pursued pursuant to what?

MR. PIETREWICZ: It is the CHP directive that Mr.

Shalaby pointed out.

MR. SHALABY: It's the actual awards of CHP 1. It's

the actual megawatts awarded to CHP 1.

MR. PIETREWICZ: Yes, thank you.

MR. POCH: Now we have 414 already in CHP 1, and you

are targeting 500 in CHP 2?

MR. PIETREWICZ: That's correct.

MR. POCH: So that is less than your -- the 1,100 we

spoke of earlier; correct?

MR. SHALABY: The procurements have a number to aim

for. They have discretion to go above the number. They

have a band around the number, and maybe the procurement

panel can get into that a little more.


MR. SHALABY: The precision is only on -- 500 is a

round number, but they have discretion to go above it.


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MR. POCH: Mm-hmm. But as a consequence, you have

actually lowered the amount of gas in your update and that,

in fact, has come out of -- apart from that misdescription

of the 63 biomass, it has come out of CHP; correct? Have I

got the gist of it?

MR. PIETREWICZ: In the accounting, yes. In addition,

there will be another 100 megawatts to be procured under the

CHP 3, some of which could be gas.

I believe in this update we've reflected it as -- I'm

sorry. It wouldn't be gas. It is a renewable CHP

procurement. So it would be 100 megawatts of renewable

procurement.

MR. POCH: A different pot, as it were.

Okay. So can I ask you, then, give me the bottom line

on gas? What portion of the resources listed in the right-

hand columns of table 6 on B-1-1 are avoidable, if I can use

that expression?

MR. SHALABY: What does "avoidable" mean? Avoidable by

what or under what conditions?

MR. POCH: Well, I am taking it -- I am assuming that

it's -- for the most part, resources that are committed, in

your view, are just that, committed. You are obliged by

directive or other -- as you said, other players?

MR. SHALABY: Being pursued by other avenues, yes.

MR. POCH: It's not within your discretion -- two years

from now, when you are back in front of the Board, you won't

necessarily have the opportunity to scale back that, because

it's marching to a different drummer?


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MR. SHALABY: It depends how it develops elsewhere.

MR. POCH: Basically, it is outside of your control?

MR. SHALABY: Right.

MR. POCH: So that I am asking: What is still in your

-- presumably it is in your plan box -- that you feel is, if

-- you know, if, as you say, conservation goes well, this is

something you can back off?

That's what I am asking. Is it just the number in the

planned in the case of gas?

MR. SHALABY: It's generally what is called planned

resources, yes. Generally that.

MR. POCH: All right. In the case of gas, is it the

2525 that is listed there? Looking -- this is all about

what flexibility is in your plan.

MR. SHALABY: Yes.


And now did any of the little changes that have

occurred on the gas front or -- affect or -- not necessarily

changes in the file number, but the timing in the interim

that have occurred, that are as of the moment, changed the

prospects for an earlier coal phase-out?

MR. SHALABY: Yes.

MR. POCH: Can you elaborate?

MR. SHALABY: The progress on the natural gas projects

that have started being procured four or five years ago, the

projects that -- the government RFPs in 2002, 2003, they're

starting to come on line. They're starting to develop in a

way that has higher degree of confidence that they would be


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282345

in service sooner than we might have expected two or three

years ago.

So the certainty by which we treat these resources is

higher now than it was two or three years ago.

MR. POCH: All right. So one of the rationales you

offer for coal is it's for insurance, as you call it,

insurance reserve?

MR. SHALABY: Yes.

MR. POCH: So I take it that that is somewhat less of a

driver at this point for keeping the coal plants on line?

MR. SHALABY: It's less of a -- the insurance

requirements are continuously being assessed and reassessed,

and they increase if other resources are not forthcoming.

They decrease if other resources are forthcoming.

MR. POCH: Can you put a number on this for us? At

this point in time, if you were asked to give us, before,

what was in the plan, assume that it was in the plan as coal

for insurance, and what it is now? Is that possible?

MR. SHALABY: It is possible, but before I do that, I

just want to indicate that as the time becomes closer -- so,

for example, considerations in 2009 are much more now in the

operating time horizon where the plant owner and operator,

Ontario Power Generation, has a lot of considerations of

what to do with that plan, how to do it, how to deploy it.

So it -- planning considerations become less of a

determinant of what happens to the plant and operating and

practical considerations become more pressing.

So it is up to the operators and the owners of the


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plant to determine how precisely to deploy the assets. But

the need for insurance is reduced roughly by 1,000 megawatts

in 2009, and roughly by about 1,500 megawatts in 2010, as we

sit today. All of that can go up, can go down, as this is

the dynamic nature of planning.

MR. POCH: That is certainly precise enough for our

purposes.

Turning to interconnections. Let me just explain. You

have 1,750 there, listed both in the before and in the

update.

My understanding was that - don't ask me to point in

the evidence where this is - but there had only been 500 in

and that further, that the 500 was really an artefact of the

market rules which either obliged or allowed current market

players to have 500 lined up as a contingency for themselves

to meet their commitments under the rules so I you assumed

it would be there for that reason.

Am I wrong? Has nothing changed or has something

changed in that regard?

MR. PIETREWICZ: Nothing has changed. The 500

megawatts you spoke of, you characterize correctly and that

500 megawatts, the sourcing acquisition of that 500

megawatts is described in the OPA's response to Board Staff

interrogatory 36.

The 1,750 or so that you referenced continues to

reflect the installed capacity of the 1,250 megawatts of the

Hydro Quebec interconnection, plus this 500 megawatts

totalling 1,750. But nothing has changed between now and


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the prefiled evidence, the August 2007 evidence.

MR. POCH: All right. So let me ask you this: You've

got installed capacity then, if you will, of 1750 in the

sense of transition giving you access to some potential

generation. Do I understand that you are treating it, for

planning purposes at only 500 as effective; is that right?

MR. PIETREWICZ: That's correct. For capacity planning

purposes, the IPSP counts on 500 megawatts of

interconnection support.

MR. POCH: And that's the 500 we spoke of that you know

is lined up by these market participants?

MR. PIETREWICZ: That's correct. The 500 that could be

lined up by these market participants, if it has to be.

MR. POCH: All right. So in essence, you have listed

it here, but in fact you are not presuming the 1,750 for

meeting your resource requirements? You are presuming 500

is helping you meet resource requirements in your plan?

MR. PIETREWICZ: Yes, that's correct.

MR. POCH: All right. And that 500 is not avoidable in

the sense that unless the market rules are changed so that

people no longer have that opportunity to protect themselves

with that? Is that fair?

MR. PIETREWICZ: Yes. I don't think it avoidable in

the sense that the OPA's not seeking to acquire this 500

megawatts. It simply -- it concludes that this 500

megawatts could be available to the system.

MR. POCH: Okay. Now, let's then turn to nuclear.

The D-6-1 at page 19 -- maybe we can get that up -- you


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say -- line 11.

MR. PIETREWICZ: Sorry, which page again?

MR. POCH: D-6-1 at page 19, line 11. You say:

"Refurbishment decisions will not be made by the

OPA, but by nuclear plant owners or operators, the

first refurbishment decision expected in 2008

relates to Pickering B. If OPG decides not to

refurbish Pickering B, then the plan assumes that

the associated capacity of 2,064 megawatts will be

replaced as a later time by new nuclear

resources."

First of all, I understand that decision is now

expected in 2009, not 2008; correct?

MR. SHALABY: That's our understanding as well.

MR. POCH: All right. So your position, can I

summarize it, is that the decision that OPG will make,

rather, excuse me, to refurbish or not won't affect the

amount of nuclear capacity in your plan, just the timing?

MR. SHALABY: Roughly speaking, yes. I mean it adds up

to a few megawatts here and there across the way, but it's

made up -- what is lost in the refurbishment is made up by

new.

MR. POCH: In that scenario.

Is that something that is in your discretion? I think

you have certainly suggested -- my read of this it is not.

You're taking that as something that's will be a given --

MR. SHALABY: Whether it's refurbished or not is not in

our discretion.


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MR. POCH: So it's not avoidable in the sense of OPA,

two years from now, looks like you can do better on CDM,

it's not something you can cancel?

MR. SHALABY: I'm still trying to -- the word

"avoidable" means things in the planning language that I am

trying to understand, in what sense you mean it. But the

decision to refurbish or not refurbish is in the hands of

the owners of the plant operators, yes.

MR. POCH: Okay. But as time goes on, certainly your

ability to influence that is going to decrease, is that

fair, if you have any.

MR. SHALABY: As time goes on decisions have to be

made, yes.

MR. POCH: Yes, of course.

MR. SHALABY: Yes.

MR. POCH: All right. So effectively that may be a

sunk decision, if you will, by the time we're --

MR. SHALABY: It will be?

MR. POCH: A decision that has been made by the time

you are looking at changing your forward plan --

MR. SHALABY: It may well be.

MR. POCH: -- for conservation? Yes.

MR. SHALABY: It may well be.

MR. POCH: Table 6 says there is 9,825 megawatts of

committed nuclear and 3,464 planned.

MR. PIETREWICZ: Which exhibit?

MR. POCH: Again, table 6 of page 34 of B-1-1. I am

slowly working my way through that table.


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I just read in the numbers that are there for committed

and planned nuclear.

I would like to just run through the nuclear resources

so we can see what's left in the planned nuclear and if it

is, indeed, avoidable or not. And I think we have just

dealt with the 2,064. I take it that 2,064 is in your -- is

that in planned or committed? The Pickering B

refurbishment.

MR. PIETREWICZ: Is the question is that roughly 2000

megawatts in the planned or committed section in this B-1-1

update?

MR. POCH: Yes.

MR. PIETREWICZ: It would be in the...


MR. PIETREWICZ: It would be in the planned section of

this table. The committed resources, nuclear resources in

this table, the updated table, would be the 3000 megawatts

of nuclear capacity at Bruce A that are currently committed

and currently contracted for.

MR. POCH: That's 3,040, to be precise?

MR. PIETREWICZ: Sure, sure. The additional 3,300

megawatts or so that would total the Bruce A or Bruce B, the

--

MR. POCH: Sorry to interrupt. The difference between

6,300 in the government statement and the 3,040 we just

spoke of?


MR. POCH: All right. That's committed -- I'm sorry,


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that's committed?

MR. PIETREWICZ: Yes, that's correct.

MR. POCH: So the planned is Pickering and -- Pickering

B, and as we said, it may, while you have characterized it

as planned, it may de facto be committed in terms of

avoidability in the next round, as it were. Is that fair?

MR. PIETREWICZ: I wouldn't say the entirety of the

planned nuclear in this table --

MR. POCH: Sorry, I was really just repeating what we

already covered on the 2,064, Pickering B. And that's -- I

think you are anticipating my next question was, What else

was in the -- what else is in the planned there? The

difference between 3,464 and the 2,064, the 1,400, is that

what we have referred to as proxy nuclear?

MR. PIETREWICZ: In general. I don't think we

specifically refer to it as proxy nuclear. We have referred

to it as planned nuclear in the IPSP.

MR. POCH: Okay. But you have also got --

MR. SHALABY: For added clarity or complexity, the

combinations and permutations of how the nuclear capability

gets developed is not limited to the two or three scenarios

that you are describing, Pickering B plus 1,400, 3,500 at

Darlington minus this.

These are illustrative ways of getting to some of the

nuclear developments. There are many permutations and

combinations that are yet to be developed further.


MR. SHALABY: These are illustrative and indicative,


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but not -- to name names and units and dates and so on, is

just interpreting more into them than is really meant.

MR. POCH: Okay. Well, let me just -- bear with me a

little more.

In the committed column, in addition to the two numbers

we just heard, the 3,040 for Bruce A and the 3,260, which I

will call Bruce B, either replacement or refurbishment,

you've got 2,000 to 3,500 for this potential capacity at the

Darlington site, nuclear capacity at the Darlington site;

correct? So there is 3,500 listed for that?

MR. SHALABY: Yes.

MR. POCH: All right. Now, what about the -- is it

3,524 to Darlington A right now?

MR. SHALABY: Close enough.

MR. POCH: All right. What about that? The

presumption is that that's going to be refurbished, is there

not?

MR. SHALABY: Well, this is where I am coming to, the

permutations and combinations. There are many, many ways of

making up the planned nuclear and the committed nuclear that

are yet to unfold, and it is probably not very productive to

exactly say what is it that's going to be procured at

Darlington site, or refurbished.

MR. POCH: I heard that, Mr. Shalaby. You don't have

to repeat yourself. I heard that message.

MR. SHALABY: Yes.

MR. POCH: I am just asking, the 3,524 at Darlington,

the existing Darlington plant, there is a presumption, is


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there not, that it will be refurbished?

MR. SHALABY: Depends what else happens. If they build

new that is larger in size, maybe it wouldn't be. It

depends on all of the other things that will happen.

So the presumption of what happens here is similar to

what will happen at Pickering, or what will happen at Bruce

B and the new build. All of it is in play right now.

MR. POCH: Well, are you making the presumption that

the 3,500 new -- up to 3,500 new at Darlington is

necessarily a replacement for the existing?

MR. SHALABY: No.

MR. POCH: No. Okay.

And the decision on Darlington A refurbishment, I take

it that is analogous to the decision on Pickering B? It's

not really your decision to make?

MR. SHALABY: Whether to refurbish or build new is the

owner's decision, yes.

MR. POCH: Well, I think you have already -- okay. I

am distinguishing between -- let's call this announcement

the Darlington B, okay? The 2,000 to 3,500, let's call that

Darlington B.

So you're saying there is a decision to be had with

respect to Darlington A to refurbish it or potentially

replace it, and we're not take talking about Darlington B as

a replacement. We're talking about a different replacement;

correct?

MR. SHALABY: Yes.

MR. POCH: Okay. Well, my math, then, is that we've


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got potentially 15,388 megawatts, if everything happened,

just the simple math.

And I think you have confirmed for me that basically

none of that is in your discretion; fair?

MR. SHALABY: All of that happens years from now. None

of that is -- you have made certain assumptions of what gets

refurbished and what gets --

MR. POCH: I'm agreeing. I am saying if it all

happened, and I'm not including the 1,400, by the way, just

the identifiable items that -- you know, Bruce A, Bruce B,

what I've called Darlington A and Darlington B and Pickering

B refurbishment, adds up to 15,388?

MR. SHALABY: You're assuming all of that would happen?

MR. POCH: If it all happened.

MR. SHALABY: Then the arithmetic you have is right.

MR. POCH: That's not in your discretion?

MR. SHALABY: It's not subject to this planning

discussion that we're into right now, no.

MR. POCH: All right. Can you answer my question?

It's not in your discretion?

MR. SHALABY: To do what?

MR. POCH: Two years from now, it's going to be in your

discretion to announce, We're not going to do one of those

things?

MR. SHALABY: If the government has a policy of having

nuclear stay at a certain corridor, a certain number, then

that's in the government's discretion. They own the

companies that make these decisions.


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MR. POCH: I am suggesting to you, though, that there

is already more there, 1,400 more, than the maximum in the

directive for nuclear.

MR. SHALABY: Yes, I accept that.

MR. POCH: So there is really not any -- if we take

this announcement that the government has made in the way

that you are urging us to interpret it, there's really not

any way that we can have -- make room for more CHP or

conservation from the nuclear part of the pie?

MR. SHALABY: I'm surprised how we arrived at that

conclusion.

MR. POCH: Sorry, I couldn't hear.

MR. SHALABY: I'm surprised how you arrived at that

conclusion. I wouldn't reach that conclusion.

MR. POCH: There is no room that you can create. There

may be room the government or the OPA could create; let's

put it that way?

MR. SHALABY: There is room that conservation and CHP

can create.

MR. POCH: Well, you don't have any discretion to make

room for more CHP and -- I mean, assuming load isn't

growing, you know, beyond anybody's expectation, you don't

have any room, from the nuclear portion of your planning

pie, unless the government makes room for you, the way you

have interpreted what they're doing. It's not in your

discretion?

MR. SHALABY: I mean, if we come three years from now

and discover that there is more economic CHP and there is


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more feasible and economic conservation, we put that forth.

And other decisions will take that into account, whether we

do it or the government does it, or the plant operators do

it. The plant operators are not going to build plants that

won't operate.

MR. POCH: Mr. Shalaby, I took it that the way you are

coming to this hearing before this Board is to say, Our job

is to build a plan, pose a plan to decide how much we have

to procure, and we're taking certain things out there as

given. Obviously what is already in the ground is given.

Things we have already been directed to do are given.

And I am suggesting you are treating the nuclear in the

same way. Whether it's in fact -- de facto, it is

contracted or not, you are treating it as a given.

MR. SHALABY: We're treating it as being worked on

elsewhere. It doesn't mean it is going to get built. It

doesn't mean it is going to get built to the schedule or the

specifications as you are describing.

People are developing options to be used as

appropriately and as other matters evolve. There is just

some other entities developing these options, and that's

namely the government.

MR. POCH: So just back to my simple question.

First of all, I take it that it's not your -- you don't

view it as your responsibility, then, to see that the 1,400

megawatt cap is honoured -- 14,000, excuse me. That's not

your job?

MR. SHALABY: The directive tells us to develop plans


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that do not exceed 14,000. That's what we do.

MR. POCH: Okay.

MR. SHALABY: The plans we develop do not include

anything above 14,000.

MR. POCH: You're disavowing any responsibility for

telling these players out there to build or not build any of

these things, and I just added numbers up for you and they

go over 14,000.

MR. SHALABY: You're getting to the point of people can

do things that are different from the plan, and they

certainly can.

MR. PIETREWICZ: I wouldn't want to leave with the

misrepresentation that this sum that you totalled, this

15,000 plus, is what is reflected in the IPSP. It isn't.

The IPSP reflects a plan that plans for no more than 14,000

megawatts of nuclear.

MR. POCH: Okay. Really this is all in aid of the

question of how much flexibility you are going to have to

accommodate more conservation and combined heat and power

and renewable, if it is cheap enough, and where those

flexibilities arise in your plan. That's really the point

of my question. If there is anything further you can add in

that regard with respect to the nuclear, please feel free.

All right. Finally there is this unspecified 650. I

take it it is just what it is, 650, it is unspecified. It

is modelled as gas, though, is it?

MR. SHALABY: Yes.

MR. POCH: Obviously it is, in the discussion we have


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been having, it is avoidable in the sense it is not even

specified yet.

MR. SHALABY: Yes.

MR. POCH: All right. We provided, in our exhibit

package -- excuse me, I am just getting mine.

In Exhibit K2.1, we just made an attempt before being

informed by your answers, to try to tally up what this

avoidable capacity is here.

I am not going to take you through this right now. I

would just ask if you could just -- leaving aside perhaps

for the sake of simplicity - I won't put you on the spot

again about what category we put nuclear in - but in the

other categories, could you, at your leisure, take a look at

that and just advise us if there is any changes we should be

making to that table for it to be a reflection of the

current situation.

MR. SHALABY: Changes to the table, that is the first

page.

MR. POCH: The first page, yes.

MR. SHALABY: Changes to what exactly, for what

purpose?

MR. POCH: Well, we had this discussion about what is

avoidable, where your flexibility is, matters that aren't

committed and that aren't -- for example, we had some

renewables in conservation that are -- not in your committed

box, they're in your planned, but in fact you don't have

flexibility because -- assuming you are honouring the

directive. We tried to capture what you do have flexibility


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and conceivably control over and that you, you know, could

yield in future within your planning discretion in the next

round or -- and how that lays out when those commitments

would be made, and what they add up to but also working --

looking at it the other way, up to what times things can be

-- currently thought are avoidable. I am just wondering if

you could -- do you understand what this is purporting to

do?

MR. SHALABY: Yes, I do.

MR. POCH: You don't need to do it on the fly. Can you

just -- perhaps we can get an undertaking for OPA to look at

that, confirm or otherwise update that table.

MR. RICHMOND: Yes that would be undertaking J2.2 and

it is an update of avoided plan capacity.

MR. POCH: Avoidable planned capacity.

UNDERTAKING NO. J2.2: TO PROVIDE AVOIDABLE PLANNED

CAPACITY AS IS PRESENTED IN DRAFT FORM IN K2.1, PAGE 1

MR. POCH: As is presented in draft form in K2.1,

page 1.

MR. PIETREWICZ: I just want to make sure I understand

this a bit more clearly. Are you talking generically?

Avoidable in what sense? Avoidable in the sense that it is

not committed? Is that what you mean?

MR. POCH: Not committed or, as we have discussed,

otherwise not within your discretion to avoid.

I am going to move on to sustainability, and we're

going to -– well, let me start with this. You had a

discussion with Mr. Crocker already about the wording of the


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regulations and so on.

Can we agree also that another legislative piece of the

puzzle here with respect to sustainability is the

Electricity Act, section 1(g), which lists as an objective

"to promote economic efficiency and sustainability

in the generation, transmission, distribution and

the sale of electricity"?

You have to speak into the microphone.

MR. SHALABY: Yes. Thank you for reminding me.

MR. POCH: I think you have indicated, in your written

evidence certainly, but I think you have reiterated that you

view the planning -- basic way you have planned as in not

just informed but really built on a foundation of a goal of

pursuing sustainability?

MR. SHALABY: Yes.

MR. POCH: And you have indicated you started with

Professor Gibson's approach to defining the language of

sustainability, and then you drafted more project-specific

criteria. Is that fair?

MR. SHALABY: Context-specific criteria. We didn't

exactly start there. I mean, this framework came along in

early 2006. We have had our research and knowledge before

that, so it came along the way and added to our knowledge,

yes.

MR. POCH: Is it fair to say it kind of crystallized

it?

MR. SHALABY: Crystallized is good, yes.

MR. POCH: Professor Gibson and his associates suggest


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that, in the evidence they have drafted for my clients in

this proceeding, have suggested -- I will start at very

general level -- that appropriate utilization of this

approach would require OPA to meet three tests. I am going

to read them in for you and ask you, before we get to

specifically what we did, whether you agree those three

tests are indeed appropriate.

I am taking these - you don't have to turn it up - they

appear in L-8-9 at page 24, and I am paraphrasing.

MR. VEGH: What is that reference again?

MR. POCH: L-8-9 at page 24. I am paraphrasing.

MR. VEGH: Can you give us a minute.

MR. POCH: Sure. And I apologize. This one, I don't

think, was on our PDF compilation for Ms. Heinz.

MR. SHALABY: Page 34?

MR. POCH: 24.

What I am going to ask you is whether you would agree

that it is indeed appropriate that you be held to this

standard. First, that planning was underpinned at the

outset by the basic objective to contribute positively to

sustainability.

MR. SHALABY: You're going to read all three?

MR. POCH: Why don't we take them one at a time. I

think it would probably be easier rather than tax everyone's

memory.

You agree that that is a test that is appropriate for

you to be held to? If we're reviewing whether or not you

utilized a sustainable approach here, that that is


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reasonable?

MR. PIETREWICZ: Pardon me, Mr. Poch. Can you please

kindly point out the reference in the evidence?

MR. SHALABY: See this requirement comes throughout the

evidence and...

MR. POCH: I am not really -- my question doesn't turn

on where or whether indeed it appears in Professor Gibson's

evidence. You can treat it as just a question on its own.

Do you agree that it's reasonable -- if this Board

wants to test whether or not you've planned based on

sustainability, if --

MR. SHALABY: If you asked us whether we considered

sustainability...

MR. POCH: Well, let me ask you if you honoured

sustainability in your planning.

MR. SHALABY: We considered sustainability.

MR. POCH: You say you considered it.

MR. SHALABY: That's the test this Board --

MR. POCH: All right. I hear what you’re saying.

Let's start with that, then.

MR. SHALABY: -- what we did, and what we think we did,

and what this Board should determine. I am careful to

separate the two.

MR. POCH: Mr. Shalaby, we don't need to argue. Let's

use your word. In testing whether you have meaningfully

considered sustainability, do you think it is reasonable and

appropriate to ask and do you think it is a reasonable test

you should have to pass, that planning was underpinned at


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the outset by the basic objective to contribute positively

to sustainability?

MR. SHALABY: It's a reasonable expectation, to

indicate whether our planning enterprise altogether was --

what was the objective of it. It was the betterment of life

in Ontario. It was meeting the requirements of the people

in Ontario in a way that meets societal expectations.

MR. POCH: All right. Do you agree that is a

reasonable -- a reasonable -- as one arm of a test to see

you have done your job properly, that is a reasonable one to

pose?

MR. SHALABY: Not a bad one, yes.

MR. POCH: The next is that the objective -- not

objective of --

MR. SHALABY: Although the entire literature is talking

about movement towards sustainability. What we learned from

the discussions with people in this literature and this

business is that you don't attain. This is not a

destination. You move towards sustainability.

MR. POCH: No argument there, Mr. Shalaby.

MR. SHALABY: So whether the plan moves Ontario to

sustainability, I am prepared to take that as a test for

whether this plan does that or not.

MR. POCH: Right. And that objective - that is, the

plan was underpinned at the outset by the basic objective to

create to contribute to positive sustainability - that

objective was elaborated for practical application through

comprehensive sustainably-based evaluation and decision


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criteria. Do you think that is a reasonable test?

MR. SHALABY: The words mean things specific to the --

to the authors of this 200-page report, and I think to treat

them in a superficial manner here may be -- not do service

to those listening to it for the first time.

So maybe you could explain what is meant by that. I

know there are very specific meanings to evaluative

criteria. These words mean very specific things in the

sustainability literature.

MR. POCH: With that caveat, would you agree it is a

reasonable test?

MR. SHALABY: Say the question again, please?

MR. POCH: The objective was elaborated for practical

application through comprehensive sustainability-based

evaluation and decision criteria?

MR. SHALABY: I don't understand this question. I

apologize. I have to write it down and I've got to reflect

on it. Too many meanings all in succession. I don't

understand what this means.

MR. POCH: Fine. Do you understand what

sustainability-based evaluation is?

MR. SHALABY: Not in the specific way that you applied

it here. No, I don't.

MS. NOWINA: Mr. Poch, it is in your evidence. If the

witness panel wants to go to it --

MR. POCH: Yes, you have that page reference, if that

helps you.

MR. SHALABY: Yes, I do. I just don't want to hasten


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to accept a sentence that rolls together 16 different

concepts, and I know that does, without unbundling that and

carefully going through them.

MR. POCH: Well...

MR. SHALABY: We considered the requirements. The

evaluation part is something that we did not do.

MR. POCH: Well, let me just break it down for you.

Do you agree that you have decision criteria that

reflects sustainability?

MR. SHALABY: We have that, yes.

MR. POCH: I am not asking whether you have it or not.

I am just agreeing -- it is a reasonable query whether you

have done that right, where you have done that?

MR. SHALABY: We have planning criteria. If you call

those decision criteria, then, yes, we should have decision

criteria.

MR. POCH: Similarly, you should have evaluation

criteria for the various steps in your planning that

reflects you sustainability, the goal of moving towards

sustainability?

MR. SHALABY: I agree that you should evaluate, but

evaluation criteria is different than evaluation. So, for

example -- so you understand the theory side, on the

conceptual side, and I am leaping into the practical side.

MR. PIETREWICZ: If that's helpful, I am not exactly

clear on how evaluation criteria would differ from the

planning criteria that we have just discussed. Are they the

same thing?


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MR. POCH: All right. If you -- I am not going to

venture an opinion, but your answer, if we get -- is that

you may be -- well be that your plan -- I think your answer

is your planning criteria are in fact evaluation and

decision criteria that reflect pursuit of sustainability.

That's your position, I take it; correct?

MR. SHALABY: We displayed performance of the plan

against various other criteria as a way of describing how

the plan performs, yes.

MR. POCH: And not just -- not after the fact -- not

just after the fact, but in how you developed your plan, you

would agree you should have done -- do your planning, do

your evaluation as part of your planning, and make your

decisions based on criteria that reflects sustainability.

You would agree that is a reasonable test and you have

purported to do that?

MR. SHALABY: I'm stuck on "evaluation".

MR. POCH: Maybe it's the choice of words. I am trying

to distinguish, and I think Professor Gibson was trying to

distinguish in his decision, the end point amongst

alternatives.

MR. SHALABY: Yes.

MR. POCH: And how you evaluate and --

MR. SHALABY: We call that --

MR. POCH: -- compare alternatives as you go.

MR. SHALABY: Sorry, Reporter. She asked me not to

interrupt you.

MR. POCH: Fair enough.


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MR. SHALABY: Apart from good manners, just to get the

transcript right.

Explaining criteria at the beginning; it's a

description of the performance of the plan at the end. We

have done that.

MR. POCH: Right.

MR. SHALABY: If that's what is meant by the test, then

I accept that to be a reasonable requirement.

MR. POCH: And, finally, Professor Gibson suggests and

his colleagues suggest that you should be -- these criteria

should be applied consistently through the planning process

and achieved reasonably in the ultimate plan; agreed?

MR. SHALABY: That's an innocent sounding test, yes.

MR. POCH: Okay, yes. Now, you started -- I have heard

you already say you started with this Professor Gibson's

eight -- I'll call them principles, and you devise these --

MR. SHALABY: Requirements. He calls them requirements

and so we do.

MR. POCH: Okay.

MR. SHALABY: You are objecting when we shorten things

and describe things differently, so I will do that again.

MR. POCH: Thank you, Mr. Shalaby, but the clock is

running.

MR. SHALABY: Okay.

MR. POCH: You devise six context-specific criteria,

feasibility -- they are feasibility, reliability,

flexibility, cost, environmental performance and social

acceptance; correct?


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MR. SHALABY: Yes.

MR. POCH: All right. Now, those six, can we agree

they're really fairly traditional electricity planning

criteria? You would have -- put another way, you would have

used those six in 1989 when you were doing the --

MR. SHALABY: We talked about that yesterday. Some of

them are traditional planning criteria.

MR. POCH: All of them, is it not the case? Did you

use all of those in 1989?

MR. SHALABY: We used three in 1989, to my memory.

MR. POCH: What of those would you not have considered

in your planning in 1989?

MR. SHALABY: This is now a historical perspective, but

the fact that --

MR. POCH: I am not worried about the formality of how

it was expressed at the time, Mr. Shalaby. I am really just

saying aren't all of these things obvious matters that you

would take into account in planning an electricity system?

MR. SHALABY: They are.

MR. POCH: Okay. And they have been obvious for

decades?

MR. SHALABY: Maybe sustainability has been obvious for

decades, as well, and we're just describing something that

has been practiced all along or could have been practiced

all along, yes. That's part of the discussion in the book,

as well.

MR. POCH: Sure. Now, turning to how you used these

six criteria, let's turn to Exhibit I-1-54. This is an


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answer to Board Staff Interrogatory 54.

I am reading in A at line 20:

"The criteria of feasibility, reliability and

flexibility were applied to individual elements of

the IPSP and treated as primary planning

considerations. If a resource option met each of

these filters, the OPA then assessed the resource

under the criterion of cost to establish a rank

ordering for potential resources from lowest cost

to highest cost. Where a proposed resource was

not the lowest cost option, the OPA still had the

discretion of including it in the IPSP if its

inclusion could be justified on the basis of

improved environmental performance or social

acceptance."

So, first of all, I took from that - and correct me if

I'm wrong - that feasibility, reliability and flexibility

were initial screens that everything had to pass?

MR. SHALABY: Yes.

MR. POCH: All right. Then cost was the initial and

primary ranking criterion used for those resources that met

the first three screens.

MR. SHALABY: Yes.

MR. POCH: And that better -- it says -- the wording

there says that better environmental performance or social

acceptance could move the ranking of a resource up, but I

take it that, in fact, from your comments yesterday, that at

least as far as environmental performance goes, leaving


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aside social acceptance and other broader considerations of

sustainability, environmental performance was not, in fact,

used to change ranking of options as between different

options?

MR. SHALABY: In the range we looked at, it did not.

MR. POCH: Okay.

And I take it that that read, if my read of that at

least doesn't have the possibility of options, passing the

first three screens is simply failing on environmental or

social, performance or social acceptance basis.

Am I reading something into there that is not there, or

-- did anything fail that you were looking at on the grounds

of environmental performance or – well, you said already

environmental performance wasn't, didn’t turn out to be a

factor. Did anything fail on social acceptance?

MR. SHALABY: I will answer that by way of referring to

the government directive. The government directive very

clearly focussed the mix of resources, the targets for

resources, the phasing out of coal. The government

directive did a lot of this work.

MR. POCH: Right. If I may, you said earlier, you felt

by meeting the directive, you were basically assuring

yourself that you were meeting social-acceptability

criteria; is that fair?

MR. SHALABY: That did a lot of the environmental work

and social acceptance work, yes.

MR. POCH: In your view did it do all of it, in other

words, obviate the need for you to do that job?


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MR. SHALABY: It did most of it, yes.

MR. POCH: Well, can you give me --

MR. SHALABY: All of it in the planning -– and -- on

the planning level, yes.

MR. POCH: On the planning level all of it, yes.

MR. SHALABY: Okay.

MR. POCH: If we could move on to in the same

interrogatory but part B you say at line 13:

"As described in Exhibit C-4-1, page 37, the OPA

did not apply arbitrary weights for evaluating one

criterion against another. That exercise would

not have provided any meaningful guidance in

developing a plan that is economically prudent and

cost-effective."

Does that -- that suggests to me, and correct me if I'm

wrong, that the OPA interprets "economically prudent" and

"cost-effective" as not encompassing these other criteria of

any factors for environment and social acceptance.

MR. SHALABY: We interpreted "economically prudent" to

mean feasibility, reliability and flexibility.

MR. POCH: Okay.

MR. SHALABY: "Cost-effectiveness" is to do with cost

and the other two are not part of "economic prudence".

MR. POCH: Okay, then you answered my question.

If we turn to I-1-57, you have provided us with some

information on how you utilized environmental information.

You already answered both Mr. Crocker and myself on that

point, in a general sense.


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Just to narrow it down a little more.

MR. SHALABY: Question.

MR. POCH: I will just read in the parts that I am

noting. You have three steps there --

MR. PIETREWICZ: Sorry. Pardon me. We are just

looking for the reference.

MR. SHALABY: 57 or 157?

MR. POCH: I have it as number I-1-57. Sorry.

MR. POCH: Tab 1, schedule 57, sorry.

MR. SHALABY: Oh, I-1, pause, 57.

MR. POCH: Yes. I didn't say "hyphen".

MR. SHALABY: Thank you.

MR. POCH: You have step 1, step 2, step 3. And if I

can just shorten them up so we can have a discussion about

it. Step 1 is, you collected the environmental indicated

data on a per-unit basis for each resource option; correct?

MR. SHALABY: Yes.

MR. POCH: Step 2 was, you quantified each indicator

for the aggregate of supply and transmission resources at

the plan level over the plan period.

MR. SHALABY: Yes.

MR. POCH: And then step 3 was you -- to test the

robustness of the plan, you evaluated and compared the

results of two sets reference conditions which was the A

cases, cases A and B, with and without Pickering B.


MR. POCH: Sorry?

MR. SHALABY: Yes. I agree.


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So I think you have already indicated environmental

factors weren't at play in choosing between options. Is

this fair to say that your tallying and looking at

environmental implications really only was at the -- once

you had a plan, you it did it at the plan stage. You

tallied things at the plan stage? You didn't --

MR. SHALABY: Well, we went into this plan with a

preliminary plan, and we went to the preliminary plan with

options before that.

I mean the evolution of all of this is we knew where we

were heading. We -- this was not all a surprise and at five

minutes to 12:00, we found out what the environmental

performance was. We knew that going in, and in an iterative

fashion.

MR. POCH: Now, you said you didn't use environment to

select between options and -- you have said this a few times

on the record -- because, you said, because stakeholders

told you not to weight impacts.

MR. SHALABY: We agreed with them on that, yes. At

this stage, given the narrow range of the parameters, given

the small differences between what one mix of options would

result in and the other, in our view, we didn't think that

would differentiate, wouldn't add a whole lot of value at

this stage.

MR. POCH: Okay. You even say you agreed with us. So

let me take you to C, Exhibit C, tab 11, schedule 2,

attachment 27.1 at page 10.


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So it is Exhibit C, tab 11, schedule 2, attachment 27.1

at page 10. This is part of -- correct me if I'm wrong --

this is part of a submission that was made to you by one of

my clients, Pembina.

If you look at the second bullet on that page, it says:

"The plan should consider imposed and avoided

externalized environmental costs in its assessment

of the cost-effectiveness of CDM, renewable and

conventional options and overall plan costs and

impacts."

So some of us told you you should --

MR. SHALABY: We're trying to -- I know the clock is

running and it is your clock, but we have to catch up.

MR. POCH: That's arguable.

MS. NOWINA: Mr. Shalaby, I need to catch up too. I am

trying to find C-11. So the document is? I don't have it.

Okay. I don't have the discussion papers.

MR. SHALABY: Is it discussion paper 7?

MR. POCH: I have the one page in front of me so I

can't be very helpful in that regard.

MR. SHALABY: What page number is it?

MR. POCH: Your cite on it is C, tab 11, schedule 2,

attachment 27.1, page 10. It is coming up on the screen in

front of you. It may be faster that way.

MR. SHALABY: There we go. Commentary on page...

MR. POCH: Okay. I was just reading from the second,

the first sentence in the second bullet on that page.

MR. SHALABY: Can we get this? If we go to the top to


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know who it is from and what the context is, that would be

helpful for us.

MR. POCH: That would be good confirmation for me too.

I have read that as being from -- prepared by Professor Mark

Winfield on behalf of the Pembina Institute which is one of

my clients; correct, Mr. Shalaby?

MR. SHALABY: Yes.

MR. POCH: And the passage I read into the record a

moment ago which is the second bullet on page 10, first

sentence of the second bullet on page 10, it is pretty clear

there that some of us were telling you that we do want you

to count these costs in your planning. Is that not the

case?

MR. SHALABY: So there are two thoughts in that bullet,

one about the portfolio of CDM. I don't think that is what

you are referring to.

MR. POCH: No. I was referring to the first sentence

there.

MR. SHALABY: Yes. I read the point, and we indicated

that we're not monetizing external --

MR. POCH: It doesn't speak of monetizing. It just

says it should consider --

MR. SHALABY: Yes.

MR. POCH: -- those costs.

MR. SHALABY: Yes.

MR. POCH: And --

MR. SHALABY: In the assessment of --

MR. POCH: I am making the simple point that you have


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said so many times that, We agreed with the stakeholders,

but the stakeholders, there was no unanimity amongst

stakeholders?

MR. SHALABY: There was no unanimity amongst

stakeholders.

MR. PIETREWICZ: I think what Mr. Shalaby was

specifically referring to was the issue of weighting

environmental results.

MR. POCH: Right. Could you turn to Exhibit C, tab 4,

schedule 1, at page 37?

This is the exhibit that is entitled, "How the OPA

responded to the views of stakeholders." Correct?

MR. SHALABY: Yes.

MR. POCH: And at page 37 -- I have to get it on my

screen so I can see the part I was trying to find -- and,

sorry, I have lost the reference. If you just give me a

minute.

All right. In fact, I want to look at page 31. My

apologies. This is where you indicate how you responded to

stakeholders on the matter of environmental performance;

correct?

MR. SHALABY: Yes.

MR. POCH: First of all, you heard that it must include

a comprehensive analysis of the environmental performance

plan?

MR. SHALABY: Yes.

MR. POCH: This is your distillation of what you heard.

First of all, let me ask you that. This is your


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distillation of what you heard?

MR. SHALABY: Yes.

MR. POCH: All right. You heard that the IPSP must

include a comprehensive analysis of the plan's environmental

performance. Did you do that?

MR. SHALABY: Yes.

MR. POCH: Where is that comprehensive analysis of the

plan's environmental performance?

MR. SHALABY: In Exhibit G-3-1.

MR. POCH: And you view that as comprehensive?

MR. SHALABY: Yes.

MR. POCH: Okay.

MR. SHALABY: Comprehensive and appropriate to the

planning stage. I mean, this is the point I spent a lot of

time on yesterday. At the planning stage, this is

comprehensive and appropriate.

At a project stage, you describe the type of land

affected, the type of watershed affected, the type of

environment and roads, and so on.

So subject to that understanding in that context, yes,

I consider the planning level to be comprehensive.

MR. POCH: We appreciate that there are certain details

which aren't knowable until you drill down to a project-

specific.

MR. SHALABY: Yes.

MR. POCH: But you can make generic assumptions?

MR. SHALABY: If it helps at the planning level, then

we will do that. If it doesn't help, then you don't.


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MR. POCH: For the purpose of comparing options, you

would want to make generic assumptions, would you not?

MR. SHALABY: Yes, yes.

MR. POCH: Did you do so?

MR. SHALABY: We have a comprehensive assessment on all

of the environmental performance emissions that we thought

were important to track.

MR. POCH: Paragraph 3 says one of the things that

stakeholders told you, in your view, was that you should

ensure that all radioactive emissions and wastes have been

accounted for:

"The OPA's analysis should make a distinction

between the toxicity of the different kinds of

wastes."

Did you do that?

MR. SHALABY: We describe the emissions, the

radioactive emissions across the years. We describe the

amount of waste.

MR. POCH: Did you make a distinction between the

toxicity of the different kinds of waste? That's what the

specific point is.

MR. SHALABY: We describe waste both as radioactive

waste separate from other waste, yes, we did.

MR. POCH: And as far as you're concerned, that is a

distinction on toxicity, because you have labelled one

radioactive and the other airborne or waterborne, or

something else?

MR. SHALABY: We described the amounts of waste that


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are fuel wastes from nuclear reactors in kilograms.

MR. POCH: If I want to understand what the toxicity of

what you are producing -- your plan is producing is, where

do I find that of wastes here? This is talking about

wastes, I believe.

Let's take the nuclear portion of your plan as an

example. If I want to know the toxicity of the nuclear

waste being produced, did you do that?

MR. SHALABY: No, we didn't get into the details of

toxicity analysis.

MR. POCH: Thank you. It says, "Evaluate environmental

effects on a life cycle basis." Did you do that?

MR. SHALABY: We did that in the first stages of

planning, but not in the second phase and for reasons that

we mentioned.

MR. POCH: I'm sorry, I don't recall those reasons.

Could you refresh my memory?

MR. SHALABY: Yes, I can. One of them is we did not

have data for Ontario, Ontario-specific data on life cycle.

The second one was compatibility in putting new options with

existing options. If we're going to evaluate the

performance of the plan, how would you do the life cycle

analysis of a plan -- a plant that is already built;

Darlington A, already operating?

MR. POCH: Mr. Shalaby, why would you want to?

MR. SHALABY: Because we're evaluating the performance

of the new options with the old options.

MR. POCH: Wouldn't the issue be to evaluate the


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options that lay before you, the choices that lay before

you, against one another?

MR. SHALABY: The options alone do not generate

emissions until they start operating.

MR. POCH: Yes.

MR. SHALABY: They only operate in concert with the

existing resources.

MR. POCH: Yes, I understand that. Well, obviously

some of the impacts of existing resources are unavoidable,

to the extent they have to do with the construction, for

example, of an existing resource, but its operation may

change in your plan and different plans, and so you could

certainly model that.

MR. SHALABY: I didn't hear the question. Go through

the four reasons or three reasons for why life cycle

assessment was less helpful at this stage than it was in the

previous time.

MR. POCH: I am just trying to understand your point

that you have difficulty -- you were suggesting you didn't

know how you would deal with existing versus new, and I am

saying -- I'm suggesting that the only issue is what's --

what choices lay ahead, what is avoidable, whether it is

from existing or new.

Obviously, some the impacts of existing are unavoidable

at this point, but still are?


MR. POCH: I don't understand the difficulty you are

asserting.


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MR. SHALABY: There is no difficulty. There is no

difficulty. It is more consistent to do the operating --

the operating performance. Let me get to the other two. So

no Ontario-specific data.

The more important one is the life assessment -- the

life cycle assessment that we performed in the first phase

indicated that the most significant impact is generally in

the operating phase.

We're going to provide evidence to that in G-3-1 when

the operating performance comes in. Most of the impacts are

in the on operating phase.

MR. POCH: We will leave that to the -- I guess

Dr. Barber and others.



Now, one of the other things that -- you were asked to

evaluate air quality rather than simply air emissions. Did

you do that?

MR. SHALABY: No. We evaluated emissions and we

indicated that that's a precursor to environmental impacts

and we did not evaluate impacts but rather the precursors.

MR. POCH: Okay. All right. Finally, if you move

ahead to the next section which is about how you responded

to stakeholder positions on sustainability as opposed to

environmental performance, and I am looking now at page 37,

paragraph 12. It says there that the advice you took from

stakeholders at the time was to provide definitions of the

planning criteria, and provide clear measures in


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illustrating how each criterion has been weighted and

evaluated, explicitly evaluating trade-offs between

alternative resources and alternative plans.

Do you feel you did that?

MR. SHALABY: Yes. The answer says that we did, yes.

We provided definitions of the planning criteria. We

illustrated how the criteria had been applied.

MR. POCH: Well, did you weight -- place different

weightings.

MR. SHALABY: We did not numerically weight, no.


MR. SHALABY: We describe the reasons for that several

times already in the last day or two.

MR. POCH: Now, in your discussion with Mr. Crocker,

there seemed to be a tension in the dialogue, I think it is

partly a question of semantics and I would just like to

clear that up, in that there is tension between

sustainability, broadly defined, and environmental

sustainability.

Mr. Crocker seemed to be asking you specifically about

environmental sustainability, and I heard a lot of responses

where you turned to your six criterion that we have listed:

flexibility, reliability, and so on.

Those aren't specifically criteria for environmental

sustainability; correct? Those are intended to be your

criteria that captured the broader ambit of sustainability?

MR. SHALABY: Yes.

MR. POCH: All right. And I want to focus now on the


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subset of sustainability that we would call "environmental

sustainability." Okay?

MR. SHALABY: We didn't distinguish between

environmental sustainability and sustainability.

Environmental sustainability, the way we understood it,

encompasses all sustainability criteria. It is not a subset

of anything. It is sustainability.

So maybe you can start by defining subset, what subset

is that? One of the important lessons we learned there are

no subsets. There is a lot of interconnected features to be

considered together.

MR. POCH: All right. Well, just then going back to

environmental criteria, I take it you are treating

environmental performance just as compliance; correct?

MR. SHALABY: As a...

MR. POCH: As compliance, with regulations.

MR. SHALABY: As information. Information that

indicates compliance, yes.

MR. POCH: All right. So it is kind of a pass/fail

test? You either comply or you don't?

MR. SHALABY: Yes.

MR. POCH: So I think you already agreed, you didn't

weight that in terms of choosing between options. You have

been very clear about that.

You tallied it, as we saw a few moments ago, you

tallied at the plan level; correct?

MR. SHALABY: Yes.

MR. POCH: You didn't set out to create an alternative


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greener plan and then compare tallies there, did you, on

environmental performance?

MR. SHALABY: We didn't know what a greener plan is. I

mean all of the options we considered here have features

that are acceptable and are contributing to consumers'

welfare.

MR. POCH: Okay.

Now, you are aware that the regulation says ensure that

safety, environmental protection and environmental

sustainability are considered in developing the plan;

right?

You are nodding. I take it assent, obviously.

MR. SHALABY: Yes.

MR. POCH: I read that, and I want to make sure you do,

that it is not just about considering it after you developed

a plan and doing a tally.

It is about considering it as you develop the plan.

MR. SHALABY: Yes, yes, it's developing.

MR. POCH: All right. So even if some of your

stakeholders said, don't try to weight environmental

concerns in choosing between options, do you agree with me

that your marching orders from the regulation are that you

must, indeed, find some way to meaningfully consider it as

you develop the plan?

MR. SHALABY: Well, let's talk about the practical

junctions where that consideration is -- the consideration

of environmental performance comes into --

MR. POCH: Before we talk about the practical


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constraints on that, that is marching order from the Reg, we

don't disagree about that.

MR. SHALABY: No, we don't.

MR. POCH: Go ahead and elaborate. What are your

practical constraints?

MR. SHALABY: Most of the generation options have

environmental impact of one sort or another. This is where

we decided not to weigh acreage of land versus tons of water

use or gallons of water use and emissions and so on. That is

where we decided not to put numerical variance on it.

The one option that did not have environmental impact

is conservation. Conservation passed hands down on cost, on

lead time, on acceptability and support in the community.

It did not meet environmental criteria to make it preferred

or advantaged in consideration in the integrated plan.

That's the one place where environmental criteria could

have, could have tipped an option against something else.

And it didn't need it.

MR. POCH: Well, just --

MR. SHALABY: It's an option we need to use the most.

MR. POCH: Just so we're clear. We agreed you didn't

weight and compare the impacts of different options,

environmental impacts of different options. We agreed the

marching order is that you shall consider it, environmental

sustainability, environmental protection in developing the

plan, and finally I think you already agreed earlier to my

friend, Mr. Crocker, that the Board was very clear in its

filing guidelines, that it was reading considered as meaning


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weight and evaluate.

MR. SHALABY: We did not weight as putting numerical

values on it. That's not the sense of weighting as

considering.

MR. POCH: How did you weigh --

MR. SHALABY: Weigh, in the people of algorithms and

models is different than weigh in terms of considering

something.

MR. POCH: I think you said to me, said a number of

times on the record: In choosing between options,

environmental factors just didn't come into play.

MR. SHALABY: Did not differentiate. Did not

differentiate.

MR. POCH: Because you didn't propose any basis, any

mechanism by which you could compare.


MR. POCH: Okay.

Now, I would like to turn briefly to social

acceptability and to turn to Exhibit I, tab 1, schedule 55,

Board Staff interrogatory 55. And at line 29, you say:

"Further assessment of the IPSP's social

acceptance will be conducted as part of the OEB's

regulatory proceeding through an open process that

provides a forum for public input to be considered

by an independent third party in a consistent,

comprehensive and transparent manner."

Well, obviously I am not going to take -- argue much of

that, but do I read it correctly as saying that this process


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that we are in at the moment is an important part of where

the consideration of social acceptance takes place, in your

process, in your planning process?

MR. SHALABY: It is, yes.

MR. POCH: It is, okay.

So if the Board were to conclude from -- at the end of

this hearing that it would be preferable to change the mix

for reasons of -- whatever reasons, that in terms of what it

has learned about the social acceptance of your plan, what

is the mechanism for that to happen?

MR. VEGH: Sorry, if I could just -- if I could provide

clarification before the witness gives an answer. I don't

have a problem with the witness giving an answer, just the

statement that Mr. Poch made, if the Board makes a

determination for "whatever reasons". The Board's mandate

is clear, under the legislation, as to its evaluation of the

plan.

So rather than having Mr. Shalaby either agree or

disagree on whatever reason the Board may consider, perhaps

the question could be considered more broadly than that or

more narrowly than that.

MR. POCH: I wasn't suggesting the Board was going to

stray from its proper jurisdiction. Assuming the Board

within its jurisdiction concludes; how is that?

MR. SHALABY: I want to step back a second and observe

that the line of questioning seems that we are into very

hard options and lack of -- we talked about development of

options that overlap. Conservation can be this much or


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larger. CHP can be this much or larger, and nuclear can be

this much or less.

So the notion of disqualifying options or not

considering options, I almost -- I almost -- I am thinking,

What is it that we didn't consider? What is it that -- the

options that we did not consider at this stage on the basis

of environmental or in weighing or not weighing anything

else?

Everything is in the race. Everything is being

considered, subject to -- subject to how it evolves, how its

feasibility works out.

So you make it sound that there are people who are left

at the door, not admitted to the party. That's not true.

So -- and I think of it as if the Board determines a

different mix. Different mix of -- for what? We were

saying conservation to --

MR. POCH: Mr. Shalaby, let me interrupt you.

MR. SHALABY: Right.

MR. POCH: Your evidence says this process is part of

how your planning process is going to take social acceptance

into that process.


MR. POCH: I'm saying if, as a result of this process,

the Board, fulfilling the mandate you have written there for

it, in effect, finds change is appropriate, what's the

mechanism for the change at this stage?

MR. SHALABY: Depending on what they find and how they

direct, the mechanism will develop pursuant to that.


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You're asking me to speculate what is it they will find

and on what basis --

MR. POCH: I don't want to get into specifics --

MR. SHALABY: -- what to do about it.

MR. POCH: We're just agreeing. I am trying to keep

this at a very high level. We are agreeing -- You are

laying out there -- you're saying to the Board the

discussion of social acceptance isn't done. We assumed that

this hearing is where that -- an important part of it is

going to take place.


MR. POCH: So I am just -- the other half of that is,

then, you must assume that the Board retains discretion.

It's appropriate for the Board to exercise discretion to

suggest or impose or refuse approval without such a change,

changes that reflect what it learns about social acceptance

in this process?

MR. SHALABY: Yes.

MR. POCH: I am reacting to the piece that's no longer

evidence by some unknown author that suggested the Board

show great deference, and I am just contrasting what you say

here.

MR. SHALABY: The decision of this Board is a very

important part of the review of the plan and of the

acceptability of the plan that we are proposing, absolutely.

I am not sure what is it that is being asked here. It isn't

obvious.

MS. NOWINA: Mr. Poch, on that note of the importance


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of the Board, perhaps this is an appropriate time for us to

take our afternoon break.


MS. NOWINA: We will take a break and return at 3:30.

MR. ADAMS: Madam Chair, I wonder if I can just

interrupt before we break. I didn't want to disrupt Mr.

Poch.

MS. NOWINA: I recognize you, Mr. Adams.

MR. ADAMS: Thank you. I am here representing a large

coalition of organizations, several of which have

representatives that are listening in on the Internet.

I have been receiving notices that we have been having

difficulty receiving a clear signal.

This is a matter that has arisen before, before the

Board. I just wanted to put on the record that there is

concerns from our group.

MS. NOWINA: Thank you for letting us know, Mr. Adams.

We will see what we can do about it. We will break until

3:30.

--- Recess taken at 3:12 p.m.

--- On resuming at 3:30 p.m.


Mr. Poch.


Panel, I just wanted to touch on one other element of

that regulation that refers to safety.

You have equated compliance -- is it fair to say you

have acquainted compliance on the safety front as –- if


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there is compliance, it doesn't then influence your choices

between options?

MR. SHALABY: We considered the analysis of safety of

different electricity options, as I indicated this morning,

and we found that the differentiation is not about the

choice of the energy option, but how is it built? How is it

constructed? How is it operated? That led us to the

conclusion that it is the governance of safety, it's the

administration of safety that matters rather than the choice

of options.

So that is the reason we went there.

MR. POCH: I am just thinking, I mean first of all, can

we agree that compliance with regulations does not equal no

impact. There is still a residual impact on whatever a

regulation may be, safety emissions, what have you; correct?

MR. SHALABY: That's a statement of fact, yes.

MR. POCH: Yes. And obviously there is different,

dramatically different kind of safety concerns with

something like a nuclear plant than there is with

conservation; correct?


MR. POCH: All right. You haven't tried to weigh

those, in terms of the nature of the risks and compare them

between these options and use that as a criteria for

selecting at the margin or...

MR. SHALABY: We understood that the safety risks are

managed by the governance of these institutions, the CNSC,

in the case of nuclear, the requirements in construction,


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operation, maintenance, audits -- all bring the risks to an

acceptable societal level.

MR. POCH: So you are treating that as therefore no

discernable difference between options on that front?

MR. SHALABY: Yes.

MR. POCH: Because it met regulations?

MR. SHALABY: And the data that we looked at in between

the period 1969 to the period 1997 or 1998, in the OECD

countries, does not distinguish very heavily between

countries.

MR. POCH: Which exhibit are you referring to?

MR. SHALABY: This is an exhibit not tabled here but

referenced in the Stratos review of the sustainability.

B-3-1, attachment 1, refers to Paul Scherrer Institut on

safety.

There was not a whole lot interest on the stakeholder

side so we didn't table that.

MR. POCH: All right. Would you be good enough to

provide a copy of that?

MR. SHALABY: We can.

MR. POCH: Thank you. If I could get an undertaking,

Madam Chair.

MS. NOWINA: Very well. MR. RICHMOND: It would be

J2.3.

UNDERTAKING NO. J2.3: TO PROVIDE COMPARATIVE SAFETY

STATISTICS FOR ENERGY PRODUCTION FOR ELECTRICITY

GENERATION DOCUMENT

MR. POCH: That's to file the --


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MS. NOWINA: Do you know the name of the report, Mr.

Shalaby? Do you know the name of the report?

MR. SHALABY: Not accurately enough. But it is

comparative safety statistics for energy, energy production

for electricity generation.

MR. POCH: Thank you.


MR. POCH: Okay.

MR. HARBELL: If I can help, it is on the record at

Exhibit B-3-1 attachment 1, page 21, the report is called,

"Comparison of severe accident risks in fossil, nuclear, and

hydroelectricity generation," prepared by the Paul Scherrer

Institut.

MS. NOWINA: The name, is at that exhibit number, not

the document itself; is that correct?

MR. HARBELL: The name of the document is: "Comparison

of severe accident risks, fossil, nuclear and

hydroelectricity generation."


MR. POCH: So as I think the title implies an answer to

my earlier question, that doesn't tell us anything about the

comparison of those risks to, say, conservation or small

renewables?

MR. SHALABY: It did not consider those.

MR. POCH: No. Okay.

So then if you could turn to D, tab 5, schedule 1, page

41. D like David, tab 5, schedule 1, page 41, at line 16.

MR. VEGH: Do you have it?


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MR. SHALABY: Not the attachment. The exhibit itself,

just about – yes, we have it.

MR. POCH: All right. I am on page 41 of 64. And this

is where you were looking at the LUEC of wind and

determining whether or not it made sense at the margin to

consider adding more; correct?


MR. POCH: All right. If you would just look at line

16, I think there is the conclusion there. It says:

"Therefore on the basis of the LUEC analysis,

adding wind resources beyond that needed to meet

the 2025 target would not be cost-effective. The

differences, however, are relatively small and the

conclusions should be subject to further analysis

in future plans."

That still holds true?

MR. SHALABY: Yes.

MR. POCH: So, Mr. Shalaby, would you agree that where

the differences at the margin are relatively small, the

choice of whether or not to give credit in your analysis

between options for things like environmental differences,

safety differences, social acceptability differences, could

be -- it's a critical choice. Would you agree?

MR. SHALABY: It could tip the balance one way or the

other if there are significant differences, yes.

MR. PIETREWICZ: I would like to point out in this

particular context, the question relates to whether the

renewables target of 15,700 megawatts should be exceeded.


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And in order to help answer that question, we -- the OPA

compared the cost of the sort of exceeding that target by an

incremental amount of wind versus the cost of a sort of more

conventional supply resource such as combined cycle gas, and

Mr. Poch correctly points out that we found while gas was

seen to be less expensive than wind, the differences were

pretty marginal.

It's important to note that this is a marginal

question. This is a question that arises once we arrive at

that 15,700 megawatt point.

The IPSP doesn't show that being the case until farther

out into the future and that's why it indicates that the

conclusion should be subject to further analysis. It's not

a question that we're being absolute on at this time.

MR. POCH: Okay, that is helpful, thank you.

MR. SHALABY: To expand on that. We're not initiating

the procurement of the gas that replaces the renewables at

this stage. Nothing much turns on that differential at this

time. So let's make the decisions further out.

MR. POCH: All right. Now, OPA -- you have indicated

your consideration of environmental factors was based on the

SENES work, and first of all, you specified what work --

the scope of work for SENES?

MR. SHALABY: Yes.

MR. POCH: And then you have noted in your materials

that you had, I guess it is Dr. or Mr. Mark Rosen do a peer

review of the SENES work?

MR. SHALABY: Yes.


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MR. POCH: That appears at G-3-1, page 2.

Can you -- can we just turn to that.

MR. SHALABY: Yes, we have it.

MR. POCH: Just scroll down. Excuse me, sorry. Again,

we lost our place here.

MS. NOWINA: Why don't you come back to it, Mr. Poch,

if you can't find it?

MR. POCH: Sorry. Thank you, Madam Chair. I think I

have found it now. Yes, thank you.

Okay, I am looking at G-3-1, attachment 2 at page 3,

and Dr. Rosen there notes some limitations, and he notes

that the report doesn't address emissions associated with

the full life cycle of power generation options considered.

He's referring to the SENES report; correct?

MR. SHALABY: Yes.

MR. POCH: And that wasn't within the scope of the

SENES study. He notes that all types of gas --

MR. SHALABY: It was a desirable outcome. The data was

not there. I mean, we went through that once before. The

data is not available.

MR. POCH: Yes, and that not all types of gas use,

environmental emissions are considered, although he says

most important emissions are considered; correct?

MR. SHALABY: Yes.

MR. POCH: It doesn't express an opinion, does it,

anywhere, about the adequacy of the report for a planning

exercise?

MR. SHALABY: Can we scroll up? I think it says it


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provides a good foundation in different places here. Let's

see.

MS. NOWINA: It says that towards the end, Mr. Shalaby,

if I can help you out, on the last page just before the

bullet points.

MR. POCH: It says it provides a good foundation for

future assessments and research and other activities. I

noted that.

But it is not -- it doesn't purport to be an opinion

letter on whether or not the SENES report is a reasonable

basis to plan your system on, does it?

MR. SHALABY: It supports that this is an appropriate

set of parameters to plan with, yes.

MR. POCH: I'm sorry, where do you see that?

MR. SHALABY: Well, can we get the page? Give me a

minute.

MR. POCH: Hmm-hmm.

MR. SHALABY: Second paragraph:

"I found the report to provide a sound and well

thought out study..."

MR. POCH: It doesn't say what for.

MR. SHALABY: "...of the direct environmental

emissions of the operating phase of a wide variety

of electrical-generating options in Ontario."

MR. POCH: He doesn't actually express --

MR. SHALABY: A reasonable approach is used in the

study. So --

MR. POCH: He's looking at it within the confines of


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the mandate that you gave SENES. Did SENES do a quality

report in responding to what you told them to do? That is

how I interpreted his opinion. Am I correct?

MR. PIETREWICZ: I don't want to get nitpicky here, but

I think this report is written in the context, as the

subject line on page 1 indicates, that the peer -- this is a

peer review of, in quotes, "supplementary environmental

impacts report" for the Integrated Power System Plan.

MR. POCH: Well, let me ask you, then.

If you look at page 3, it says -- he's referring now to

the SENES report, and he says:

"The report acknowledges that simply examining

data is one step in appreciating the impact of

environmental emissions and clearly points out

that emissions data need to be weighted relative

to impact criteria - example, human health, animal

health, planned and land harm cost - to allow a

better understanding of the impact to be

developed."

Now, it seems to me he's agreeing with -- he's making

observation that the SENES report is not sufficient unto

itself. Isn't that what that says?

MR. HARBELL: To be fair, sir --

MS. NOWINA: Microphone, please.

MR. HARBELL: Sorry, I think we should --

MR. POCH: I can read on.

MR. HARBELL: If we can read the last sentence, please,

it says:


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"Other weighting factors could also be used..."

First sentence of the first paragraph:

"...and different individuals, agencies and

countries often disagree on the magnitudes and

types of weighing factors that are correct."

MR. POCH: Right. You have done that, and that's fine.

I have no objection at all.

Isn't it perfectly clear, from that full paragraph,

that he's saying, just tallying up these emissions, you

know, SENES has done a good job tallying the emissions.

They are within the ambit of their mandate, but that's not

sufficient. You have to weight them to be able to compare

them. You have to -- they're important, these criteria,

these things are. Am I misreading that?

MR. SHALABY: Not knowing what specific airsheds, what

specific water streams, not knowing enough about the

projects, going down that further step is less meaningful

and less relevant at this stage.

Without knowing these details, we're not going to step

as close as where you want us to be as the environmental

assessments or projects are going to do. There are

environmental assessments that will take that into

consideration.

MR. POCH: Those environmental assessments are all at

the project stage and they will do nothing, will they, to

inform us of our choice at the plan stage between options;

is that correct? Yes or no?

MR. SHALABY: Well, the plan level gets aggregate


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indicators.

MR. POCH: Yes, you said all of that.

MR. SHALABY: Project specifics will get into the

impacts on the specific communities and their --

MR. POCH: Mr. Shalaby, my question is very simple.

The subsequent appraisals at the project level will not help

us in this exercise of developing a plan that chooses

between options. It might help some future planner when he

has that data, but it is not going to help us.

MR. SHALABY: It helps us to know that these appraisals

are going to be made.

MR. POCH: And what good will that be when they're

deciding whether to put the transmission line down corridor

A or B or move the --

MR. SHALABY: They can decide not to put it in corridor

A or B and not locate a power plant --

MR. POCH: How are they going to decide that if they

don't have the whole plan in front of them to decide what

the alternative is to transmission? They are not going to

be in a position to make that trade-off, are they?

MR. SHALABY: They will be in a position to decide what

the mitigating measures should be and what accommodation

should be and whether to reject the project right out or

not.

MR. POCH: Within the confines of a plan that has

already been made.

MR. SHALABY: Yes. That is the context, yes.

MR. POCH: Thank you very much. Let's move on to


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uncertainty.

I think we may have a little closer meeting of the

minds in this section, let's hope. Maybe we can move along

a little faster.

First of all, I just want to list for you some -- some

of the uncertainties that I think you have identified and

just make sure we agree that these are some of the biggies

in your plan and that could have impacted on your planning

and could still impact on your planning.

One is nuclear cost and performance is obviously a big

factor in your plan. It is a big part of it.

MR. SHALABY: Yes.

MR. POCH: CDM achievability and timing?

MR. SHALABY: Yes.

MR. POCH: Can we agree that the cost uncertainty of

CDM is less important, as you have indicated, that your --

you are not getting near the limit of cost-effective CDM

until I think we're up about 150 percent of where you are

shooting for?

MR. SHALABY: You are reading off a specific list

somewhere?

MR. POCH: No. I am just -- just my compilation.

MR. SHALABY: Yes. Cost of CDM, we do not have a good

handle on the cost of CDM delivery at this time to consider

cost uncertainty a big factor at this time.

MR. POCH: Right. But I think the LUEC of your CDM

portfolio is something like 2.9 cents or something, it’s

well below the alternative.


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MR. SHALABY: It is.

MR. POCH: The uncertainty around its cost is not a big

factor for you to have to wrestle with in planning.

MR. SHALABY: That's not at this stage, no.

MR. POCH: Right.

Now, for combined heat and power, we have the same

issues as CDM, we have uncertainties about achievability and

timing, but also cost, I would suggest.


MR. POCH: All right. And perhaps there's --

subcategories there. To the extent that combined heat and

power uses fuel that was otherwise going to be burned anyway

or captures waste heat, obviously cost is less on

uncertainty; is that fair?

MR. SHALABY: Obviously.

MR. POCH: The marginal cost is less uncertain.

MR. SHALABY: That hasn't proven to be necessarily

true.

MR. POCH: Could you just -- I was just saying

comparing the two parts of combined heat and power, the kind

where you are doing incremental fuel burning and the kind

where you're not, obviously there is fuel cost uncertainty

in the one situation and not in the other. That is my only

point I was making.

MR. SHALABY: No. I am not agreeing with that.

MR. POCH: All right. Could you explain why, when you

are just capturing waste heat from a process that’s already

in place, that the, there is --


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MR. SHALABY: The waste heat is generated by a primary

fuel of some sort.

MR. POCH: My question was posited in a situation where

that primary fuel is being burned anyway. By an industry

that is raising steam, they’re raising steam whether you go

and help put in a CHP plant there, or not.

MR. SHALABY: If it's going to happen anyway?

MR. POCH: Yes.

MR. SHALABY: Then your premise is correct.

MR. POCH: Right.

Renewable costs and timing are both uncertainties in

your plan? Renewable generation? Both costs and timing?

MR. SHALABY: Yes. But also performance and

incorporation into the grid --

MR. POCH: Right.

MR. SHALABY: -- particularly to do with wind.

MR. POCH: Would you agree the biggest timing concern

with respect to renewables is really the timing associated

with the transmission to incorporate them?

MR. SHALABY: Yes.

MR. POCH: All right. Load is obviously a big

uncertainty in your planning exercise, the level of load.


MR. POCH: Would you agree that technology evolution,

for loads, for generation, for efficiency technologies, for

the grid, all of these things are -- add uncertainties?

MR. SHALABY: Yes.

MR. POCH: So would you agree with all of these


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uncertainties? Flexibility -- I think you already said

this, but flexibility is really a key value and

appropriately a key value in your planning?

MR. SHALABY: Yes.

MR. POCH: And I’d just like to give you a few items

and see if we can agree about these items for -- would tend

to increase flexibility. As flexibility, your plan would

tend to increase if it has more of these, of components with

these attributes.

One, shorter lead time options would tend to add

flexibility.

MR. SHALABY: If they have other attributes that are

good, yes. So this is --

MR. POCH: In each case, take it as given I'm agreeing

with you --

MS. NOWINA: Mr. Poch, please don't interrupt Mr.

Shalaby when he is answering the question.

MR. POCH: Sure. Go ahead, Mr. Shalaby.

MR. SHALABY: So, it is -- agreeing to one dimension at

a time will have me come at the end and say: But the short

lead time, but they have a CO2 emissions.

MR. POCH: I'm agreeing with you, but --

MR. SHALABY: So the totality of the criteria, the

totality of the performance has to be kept in place.

MR. POCH: Of course.

MR. SHALABY: But to use a, the notion of everything

else being equal, short lead time is better than long lead

time.


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MR. POCH: Take that as a given in each case. I’m not

disagreeing. So a shorter lead time adds flexibility

including lead times for approvals, for example.

MR. SHALABY: Yes.

MR. POCH: Shorter construction time options lead to

added flexibility.

MR. SHALABY: Yes.

MR. POCH: Smaller size of increment increases

flexibility?

MR. SHALABY: Yes.

MR. POCH: Avoidability of sunk cost which is a bit of

an overlap with those other things --

MR. SHALABY: That reduces the regret in a way, yes.

MR. POCH: Reduces flexibility? Because you can -- it

is not all sunk. You can walk away easier?

MR. SHALABY: Yes, right.

MR. POCH: Long-term load following ability. So

options that sort of automatically respond to, as load

changes on the horizon? Those would --

MR. SHALABY: Operating flexibility is a value, yes.

MR. POCH: I am thinking even on a planning time frame.

If you have options that are more available or less

available depending on what happens to load, that is a

natural hedge, in your plan.

MR. SHALABY: Yes.

MR. POCH: And then on an operating time frame, options

that diurnally and seasonally follow load would add, would

assist you?


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MR. SHALABY: Yes.


All right. Now, I think it is pretty obvious where I

am going with some of that and I won't drag you through it

obviously. CDM enjoys many of those.

MR. SHALABY: Absolutely.

MR. POCH: Larger options like nuclear, I think we can

agree doesn't enjoy a lot of those, but as you have

indicated may have other attributes like its forecast cost

that persuade you to go for it.

MR. SHALABY: You use different options for different

purposes, yes.

MR. POCH: Yes. I just wanted to ask you a little bit

about combined heat and power. Can we agree that it does,

because it is a little bit unusual, it does have some of

those attributes about the ability to follow load on a

planning timeline and on a diurnal and seasonal operating

time frame, because it -- the opportunities for it tend to

be tied to the prevalence of loads, industrial loads, for

example, on the system?

MR. SHALABY: This is what option specifically now?

MR. POCH: I was looking at combined heat and power.

MR. SHALABY: Typically follows a steam load, yes.

MR. POCH: Hosted by a load, by a customer?


MR. POCH: So it naturally has those attributes.

MR. SHALABY: Yes.

MR. POCH: Okay. Now I would like to turn to


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Exhibit D, tab 6, schedule 1, page 29.

And I am just reading from, under flexibility there,

starting on part-way through line 7, I think, is probably

the place:

"The larger unit capacities and relatively long

lead times for new build nuclear generation

inherently limit its flexibility. However,

planned flexibility exists in that provision is

made to accept additional conservation, renewable

and CHP resources to meet base-load requirements

should these be feasible. There is also

flexibility to accept new build nuclear base-load

resources earlier than assumed in the plan."

Can I sum up by saying that the recent addition that

you have made to the committed column for your nuclear, in

keeping with that paragraph and the discussion we just had,

tends to reduce plan flexibility?

MR. SHALABY: I am not sure I agree with that. I mean

it introduces the amounts of resources that we're planning

for, but does it reduce plan flexibility? Does it reduce

the ability to accept more conservation? I don't think so.

MR. POCH: All right. Okay. I had taken -- read you a

paragraph because it was about base-load requirements,

suggesting that -- it spoke to the very question.

MR. SHALABY: If base-load conservation, next time

we're here in the period of time is larger than we project

at this time, the requirements of base-load would be fewer.

If CHP is submitted to be larger, the estimates for


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base-load requirements would be lower.

MR. POCH: I am going to move on.

MR. SHALABY: Yes.

MR. POCH: Just on this question of flexibility. If

you could turn to Exhibit B, tab 1, schedule 1, at page 8.

This is your updated, your update exhibit, if you will.

At line 20 there, you say:

"This is a time of great uncertainty. With

significant forces affecting the demand forecast,

the current ambiguity in determining the

explanation for current demand levels affects

long-term estimates, as well. This shows the need

to plan to a range or band of forecasts and not

focus on a single set of numbers. The OPA will be

monitoring over the next few years activities

related to the above factors and will adjust its

planning assumptions when more clarity is gained."

First of all, I take it that you're saying that the

need for flexibility has increased?

MR. SHALABY: It's at a premium. It has always been

there, and we're highlighting yet another reason to retain

flexibility.

MR. POCH: It's increased since you drew the plan.

This is telling us the need for flexibility has increased.

MR. SHALABY: The uncertainty in economic conditions in

Ontario has become more evident.

MR. POCH: Yes.

MR. SHALABY: But the forecasters always knew that;


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just the Globe and Mail now knows that.

MR. POCH: Well, I thought that -- it is citing, for

example, this current ambiguity which didn't exist before,

so there is a new found need for flexibility on your part;

is that not the case?

MR. PIETREWICZ: I think, if I can just state, the IPSP

itself I think recognizes the potential to have futures that

exhibit different load, whether as a result of different

amounts of conservation or due to fundamental economic

drivers for the load.

So I am not sure that what is being described here in

B-1-1 is necessarily distinct or outside of that recognition

that the IPSP already makes, and that's why the IPSP is

developed in the face of uncertainty and examines a variety

of scenarios, including scenarios of higher demand growth

and scenarios of greater success in achieving conservation

potential.


I think what you just said to me is you viewed the plan

as sufficiently flexible to accommodate the kind of

uncertainty that is being discussed in that paragraph; is

that correct?

MR. SHALABY: Yes.

MR. POCH: All right. And I think I asked you just a

moment ago whether the new commitment that you have in your

plan on nuclear made the plan less flexible, and I am not

sure you agreed with me.

MR. SHALABY: We're not making a new commitment. We


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are considering these resources to being -- these options of

being developed by others.

MR. POCH: The fact of this commitment as you perceive

it?

MR. SHALABY: Yes, the fact that other people are

pursuing options does not limit flexibility. It increases

flexibility. It increases the number of options open to

Ontario. That's the way we see pursuit of options is a good

thing. It's not a limiting thing.

MR. POCH: You have said that -- you said I think in

your oral evidence earlier that one of the roles of the plan

and of this Board's -- this discussion and the Board's

report will be that variety of stakeholders in industries

and institutions will be -- will take their lead from this;

is that fair?

MR. SHALABY: Will take?

MR. POCH: Will take their lead from this.

MR. SHALABY: Yes.


MR. SHALABY: They will interpret the plan in ways that

will inform their business decisions.

MR. POCH: They have taken -- in fact, some presumably

have already taken their lead just from the tabling of your

plan, including the government, presumably?

MR. SHALABY: To some extent, yes.


Indeed, if the government goes ahead and does in fact

proceed with all of these nuclear commitments, as you have


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styled them, having placed some reliance on your advice, and

if load does not materialize as forecast, as we heard some

evidence might be the case, as we have discussed, isn't it

clear that we run the risk that the nuclear, to the extent

it is actually committed to, to go ahead and rely on what

you say - it's a good idea, let's sign some contracts -

that's going to then prevail at the margin against other

options?

MR. SHALABY: Once the decisions are made, yes, they do

now dictate what the future options are and the future

opportunities are.

MR. POCH: We are already seeing that with the

contracts that you have signed with Bruce for refurbishment.

There are penalty clauses in there for access to

transmission, and so it is incumbent upon you now to reserve

that transmission, the limited transmission there is, for

them until such time as you can -- somebody can add more;

correct? It prevails, because there is a contract. There

is a cost.

MR. SHALABY: I am not sure what the reference is to

the previous discussion. I mean, that's -- the parallel

between this question and the previous one is --

MR. POCH: You placed an orange zone over some

renewable development until transmission gets added coming

out of Bruce?

MR. SHALABY: Right.

MR. POCH: In the interim, it is Bruce that gets access

to that transmission, because they have a contract that says


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if they don't, they're going to pay a penalty?

MR. SHALABY: Yes.

MR. POCH: Right? Okay.

And another place that this kind of competition gets

set up is with respect to -- between nuclear and between

efficiency and renewables is due to any constraint that

arises because of surplus base-load generation; correct?

MR. SHALABY: You mean conservation and nuclear?

MR. POCH: Between renewables and conservation on the

one hand, and nuclear on the other. You have to commit a

bunch of nuclear. It is actually committed.

It's not easy to manoeuvre. You have times during the

year when you have got more generation that isn't

manoeuvrable on the system than load, and that is called

surplus base-load generation; correct?

MR. SHALABY: Yes.

MR. POCH: So the more nuclear you have committed, the

more times there is going to be a competition between -- if

you will, between -- there is more of a constraint on your

pursuit of other options that would add to that problem?

MR. SHALABY: I will accept that, yes.

MR. PIETREWICZ: I would add that perhaps it is a

little more subtle than that. This competition that you

speak of would depend on things such as what the load is,

what types of actions could be taken, such as outages closer

to the real time frame, what kind of technologies were in

place on the system at the time.

So I am not sure that it is necessarily as you


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describe, but it is more context dependent.

MR. POCH: I promise you we will come back to discuss

it in more detail. I am just identifying that as an area

where there is a potential competition for space, as it

were.

Okay. Then another kind of uncertainty is with respect

to escalation in your forecast -- forecasts, cost

escalation.

There are differences in the degree of cost uncertainty

as between options? Some have fuel price risks? Others are

more exposed to capital cost escalation?


MR. POCH: Is it fair to say that energy efficiency

seems to share that pressure less? I am going to actually

-- well, first of all, let me see if you agree with the

general proposition that it is a little less susceptible to

that.

MR. SHALABY: I suspect you are right. I don't have a

basis for that, other than it's not a mega project and it's

not competing for the resources that are pushing

construction costs up.

MR. POCH: Okay. In K2.1 I have included something

that just happened across my desk the other day. It's the

page 2 of K2.1, which is our cross exhibit.

You don't really need to read it. It's an ad for what

they're calling a smart UPS, uninterruptible power supply,

the kind that a number of us -- probably most of us have,

protecting our computers from the unreliability of the grid.


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No offence intended.

Now, this is a new product that has just hit the

market, as I read, where the machine is smart enough to

sense the load on the main outlet that you plug your

computer into, and when that load drops enough because your

computer has gone asleep or you turned it off, it

automatically then switches off all of the other outlets for

all of your plug-in peripherals.

Do you understand what the technology purports to do?

MR. SHALABY: Generally speaking, yes.

MR. POCH: All right. I am not going to query you on

its potential or anything. I know it is not your panel.

MR. SHALABY: I understand.

MR. POCH: But it struck me that this is a good example

of how energy efficiency can often largely be about

innovation as opposed to, you know, building more stuff with

concrete and steel.

MR. SHALABY: Energy efficiency is indeed about

innovation, yes.

MR. POCH: Would you agree, in this one, the ad there,

they make the point of saying it is the same price as the

old one and it will save you 40 bucks in power over whatever

period. It hardly matters.

Would you agree that we're not witnessing a significant

escalation for a number of these kinds of technologies that

offer efficiencies? LCD screens are getting cheaper, not

more expensive.



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MR. POCH: All right. And we saw --

MR. SHALABY: Everybody has a number on them, yes. As

a result, people have more than one.

MR. POCH: Hmm-hmm.

Last time you and I did this dance, Mr. Shalaby,

compact fluorescents were I think about 25 bucks a pop in

1989 dollars, and today they're probably about two and a

half dollars in 2008 dollars so they have come down about,

oh, 95 percent.


MR. POCH: So I think you have already agreed

escalation may be less a factor for energy efficiency.

Would you agree it is indeed we're likely to see some de-

escalation?

MR. SHALABY: In some technologies and some

applications, yes.

MR. POCH: Now, would you agree that copper, steel and

concrete, these inputs into generation resources have

experienced some significant escalation of late?

MR. SHALABY: Yes.

MR. POCH: That's kinds of an increasing concern for

-- I am sure for system planners; correct?

MR. SHALABY: That is -- I didn't hear the last part.

MR. POCH: Increasing concern for system planners.

MR. SHALABY: It is concern for people developing

generation projects and planners as well, yes.

MR. POCH: So would you agree that from a planning

protocol perspective, it might be appropriate that while,


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you know, while acknowledging -- I readily acknowledge it is

difficult to forecast escalation, would you agree it might

be reasonable to give some credit to options that are less

exposed to escalation risks?

MR. SHALABY: Yes.

MR. POCH: Okay.

MR. SHALABY: If it is conservation technologies that

you are referring to, they are the first directive priority

that we talked about, they're being pursued to the maximum

that we can place confidence in at this stage and would be

pursued beyond that. And as our confidence develops, they

will be updated.

So you have no argument at all that conservation is the

very best option to pursue.

MR. POCH: Would you agree it might be appropriate not

just to give it priority in development ranking, which you

indicate you have, but that it might be appropriate to give

it credit relative to other options? I am talking dollar

credit.

MR. SHALABY: The dollar credits will not change its

contribution in this plan, in that we’ve colloquially been

saying we're going to take all of the conservation we can

identify, all of the conservation that we can rely on at

this time. And the dollars is not a barrier at this time.

There is a huge advantage to conservation at this time.

MR. POCH: All of the costs we speak about, your

supply-side costs, are the input to the avoided costs

against which conservation measures get tested; correct?


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MR. SHALABY: For reference, yes.

MR. POCH: That's what the planners and the delivery

people and the people in the field in some cases use when

they administer the TRC test which this Board, in its other

hearings, has heard too much about; right?

MR. SHALABY: Yes.


So when the architect is deciding to specify how much

insulation to specify for a building, and he's having regard

to your program guidelines, what you will give your rebate

for or some design assistance or whatever, all of that is

going to be in the context of rules for a program or program

design that's had regard to that TRC test to have those

avoided costs; correct?

MR. SHALABY: You know well that these incentives do

not have very much to do with the TRC test.

MR. POCH: Fine. But the items that qualify do. How

much insulation you can add is going to be limited by when

it turns TRC negative.

MR. SHALABY: As counsel reaches for the button, I

suspect we are getting into a level of detail that a

subsequent panel will be better able to deal with.

MR. VEGH: Thank you, Mr. Shalaby.

MR. POCH: Let's take it as a given, then, and I will

confirm this with your conservation panel that either in the

delivery, the design or operation of conservation programs,

the depth of efficiency that gets applied in a give

situation or the number of measures or the type of measures,


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or whatever, they bump into the limits of the avoided costs.

MR. SHALABY: actually – actually, that is not my

recollection. Very little bumps against the TRC. Very few

options are expensive enough, as expensive as supply.

Typically, most of the conservation is lower cost than

supply.

MR. POCH: I will take that up with the other panel.

MR. SHALABY: Right.

MR. POCH: To the extent anything does bump into that

limit, then the costing that you have put on, of your

various supply options and whether you credit more flexible

options against -- give it a credit or demerit in the

costing, would ultimately affect how much a consumer gets.

MR. SHALABY: Yes. To the extent there are some

options constrained by cost comparison, that would be --

that limit would be raised. But the practical experience is

there is very little of that, if any.


Now, just in terms of that, if you could just turn back

to Exhibit K2.1, page 3. I guess it is page 4. It's the

page that has a chart showing -- entitled: "actual versus

predicted demand for electricity in Ontario, 1975 to 2010."

You have already brought to our attention that the

little bit on the right-hand bottom of that chart where you

are showing the -- in your exhibits you have shown how the

recent load has dropped now below your -- both your load

forecast and it's below your -- below the scenario that is

your high conservation or low load scenario as well; right?


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MR. POCH: It is outside of the bounds that you did

sensitivity testing for?

MR. SHALABY: Yes.

MR. POCH: We just laid on here a couple of other

things. One is the little extra red line which is the

IESO's 2008 prediction they're predicting a trend that's

continuing. Correct?

MR. SHALABY: Subject to confirmation. I am assuming

you are transcribing this right, yes.

MR. PIETREWICZ: Just for clarity. I want to make sure

we haven't misspoke.

The forecast illustrated on this slide, I understand,

are the OPA reference forecasts. The reference and the low

reference forecast not yet inclusive of the contributions of

conservation.

MR. POCH: Yes. Then the --

MR. SHALABY: That comment applies to comparing

forecast to actuals. actuals are after conservation.

MR. POCH: Hmm-hmm.

MR. SHALABY: Forecasts, we better be clear whether it

is before or after conservation.

MR. POCH: Right, right. We will certainly check. I

think you are reading the label correctly.

MR. PIETREWICZ: Thank you.

MR. POCH: The other thing we overlaid on here, though,

in fact just on that point I take it your own evidence, you

filed material in B-1-1 which treats that correctly. We can


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look to that if we want to see and make sure we have it

accurate so nothing turns on that part of this graph here.

The other thing we overlaid are these two points which

were the predicted high case and predicted low case in the

balance of power, the DSP exercise.

Do you recall that, Mr. Shalaby?

MR. SHALABY: Yes. Those points are before

conservation.

MR. POCH: Oh, okay.

MR. SHALABY: So after conservation, which is the right

comparator to what actually happens, is a better comparator.

MR. POCH: Can you provide us with that, what the DSP

10 percent likelihood low and high points were, after

conservation?

MR. SHALABY: I don't know that I have the documents

handy, but they're -- I can if it is relevant and useful.

MR. POCH: Conservation wasn't as nearly as big a term

in that plan as it is in this plan.

MR. SHALABY: Conservation programs may or may not have

been, but conservation, as in the productivity of the

economy and productivity of use of electricity, is a

different matter.

MR. POCH: That kind of conservation was in the load

forecast at that time; correct?

MR. SHALABY: Was -- did not get forecasted right.

MR. POCH: Right. So my point is, then, that then this

graph is fine, that those points are the 10 percent for the

load forecast exclusive of utility conservation, let's put


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it that way?

MR. SHALABY: Yes.

MR. POCH: And --

MR. SHALABY: My recollection if you move the range

down a bit, then the actual observed is within the 10 to

90 percent, towards the lower probability.

MR. POCH: Right.

MR. SHALABY: But within 10 to 90. The point is the

same.

MR. POCH: Around your 10 percent likelihood mark?

MR. SHALABY: It's towards the lower probability, yes.

MR. POCH: Okay. All right.

And that was -- you and I both recall that plan was

withdrawn before the hearing even concluded, because that

was already unfolding, wasn't it?

MR. SHALABY: Yes.

MR. POCH: And the current plan, is it fair to say that

the plan was built -- I heard what you said with an emphasis

on flexibility, but it was built around the central forecast

that is your central load -- your reference load forecast?

MR. SHALABY: Reference, yes.

MR. POCH: Yes. Then you did this -- you had an

A plan and a B plan, depending on what happens with

Pickering?

MR. SHALABY: Yes.

MR. POCH: And the other plans that you have offered

-- the other cases you offered, I should say, in your

language, case 2A and B, for example, is for higher assumed


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load growth, and 3A and B is for higher conservation, and 4

has to do with transmission.

In G-1-1 you have said you have done this to see what

possible plan adjustments -- to see that possible plan

adjustments can meet these cases; is that fair?

MR. SHALABY: Yes.

MR. POCH: All right. And so these are not entirely

new plans?

MR. SHALABY: It's a single plan.

MR. POCH: It's a single plan.

MR. POCH: Different conditions.

MR. POCH: You didn't optimize those other ones for a

particular alternative load forecast. You were simply

saying, If we have a change in load or we have a change in

one of these other factors, we're just going to test how the

single plan would respond and see that it could respond?

MR. SHALABY: Yes.

MR. POCH: Okay.

MR. PIETREWICZ: Recognizing that the more sort of

optimized, in quotes, or more detailed assessments would

follow.

MR. POCH: Right. You didn't do cost assessments of

these alternatives? You only did that in the main plan --

of the plan, let's say?

MR. SHALABY: Yes, the reference case.

MR. POCH: So in that sense, your testing of robustness

is not tested for how -- how costs might change

significantly or not.


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MR. SHALABY: We did not describe those results. You

are correct.


Now, you certainly didn't start with a range of futures

and develop a range of plans and test to find some kind of

-- well, let me back up.

I am aware that -- and correct me if I'm wrong. You

will certainly be more aware than I am. I think an example

is that the Pacific Northwest Power Planning Council, which

I think has a new name now, does an exercise where they --

they put probability bounds around virtually every

significant input into their plan.

I know you have done that on your reserve insurance

modelling, but they do it throughout their planning

exercise, and they must have a supercomputer or something,

because there must be thousands of permutations and

combinations, and they come up with a curve of costs and

risks and they look for the minimum point.

You haven't attempted anything like that kind of...

MR. SHALABY: I am not sure what they do, but we

haven't attempted cost minimization in the way of searching

for it amongst 1,000 alternatives.

We think we have reached cost minimization by choosing

the low cost option at the fork in the road when there is a

choice. We demonstrated the five forks in the road, that

there are choices, and if you make the right choices along

the way, you arrive at a low cost option.

MR. POCH: I understand. But they don't just look for


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the lowest cost plan give our best estimate today. They

look at the lowest cost plan given a range of possible

futures, and then count -- they look for the lowest combined

cost and risk of cost of plan, which is not synonymous with

the lowest cost plan, given our --

MR. SHALABY: We have done estimates of this in the

supply mix advice work, and we have done estimates of this

in determining the base-load requirements, for example.

We have done estimates of viability and uncertainty in

cost.

MR. POCH: You did the probability that you -- as I

think I mentioned, you did that -- in your reserve

insurance, you have a probability scatter. And you have

done that, I think, in your -- you did a deterministic and a

probabilistic assessment of the crossover in gas and

nuclear, another point you did?

MR. SHALABY: Yes.

MR. POCH: But you didn't do it for a range of planned

futures and load futures, and what have you?

MR. SHALABY: We actually did. In the planned cost

section, we have a probabilistic range in costs.

MR. POCH: I guess I may not be making myself clear.

I think you may have already agreed to this. I

apologize if I am repeating myself, but you haven't done an

exercise where you posited a range of different potential

futures, developed a range of plans for those different

futures, and then did this kind of, you know, multivariate

stochastic analysis?


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MR. SHALABY: At the earlier stage of the supply mix.

MR. POCH: Oh, you did?

MR. SHALABY: Yes. We have two scenarios in the supply

mix. They are different enough, variable enough.

MR. POCH: Then you haven't done that at this stage?

MR. SHALABY: Because the distinctions are small. We

developed a single plan that meets the requirements, yes.

MR. POCH: Now --

MS. NOWINA: Mr. Poch, how close are you to wrapping up

this bit of questioning?

MR. POCH: I have about another, oh, four or five

minutes on this section. I can break if you would prefer.

MS. NOWINA: Well, if you could complete it in four or

five minutes, that would probably make sense.

MR. POCH: Okay.

We have a little bit of mis-history, don't we, Mr.

Shalaby? In the past Ontario Hydro, we have seen they did

up a forecast base plan, a central line forecast, and would

you agree that in the end they've -- they built Darlington,

load fell away. They had to resort to things like special

discounted rates to sell off excess power or encourage

selling off excess power, and they all about withdrew from

conservation in response. That's the history?

MR. SHALABY: That's -- some of those facts are

certainly true.

MR. POCH: All right. With the benefit of 20/20

hindsight, a lot of DSM was foregone that would have been

cheaper than the Darlington costs turned out to be. Had we


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been able to, at the time, have foresight, that would have

been DSM that was cheaper than Darlington turned out to cost

as an alternative?

MR. SHALABY: If you could project that to do something

cheaper than what you have done already, then what you are

concluding is correct, yes.

MR. POCH: All right. But at the time Darlington was

committed to, there was uncertainty about the cost potential

and achievability of CDM, and there was an estimate for

Darlington costs that was a fraction of its eventual costs.

That's what got us into that mess?

MR. SHALABY: That's part of the record, as well.


MR. SHALABY: I am not accepting the description of

"mess".

MR. POCH: Got us to that point in reality, let's put

it that way. Fair enough.

Now, I just had one other little point here on

conservation. If we're looking at the difference between

those options, a megawatt of efficiency is not equivalent to

a megawatt of supply, right, because of the difference in,

for example, losses, especially peak losses?

MR. SHALABY: It can be adjusted. I mean, it depends

on a lot of things, but a megawatt is not a megawatt.

MR. POCH: Right, because a megawatt of conservation

avoids the losses of getting the generation to the end --

MR. SHALABY: It depends on whether it is coincident

with peak or not. Is it sustainable over a period of time


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or not, and so on?

MR. POCH: To the extent it is coincident with peak,

obviously it has much greater value in that?

MR. SHALABY: If it's sustainable over 20 years, it has

a value the same as generation.

MR. POCH: Same is true of self generation that is co-

located with load?

MR. SHALABY: It has benefits in terms of losses, yes.

MR. POCH: Similarly, with respect to reserve, both of

those options have the ability -- they're small and

dispersed and located with load. They reduce your reserve

requirements?

MR. SHALABY: Right, yes.

MR. POCH: Planning reserve requirements. Okay. Just

to close, then, my experts have advised me, and they filed

their reports, that there is some perhaps 6,000 megawatts of

CDM that they believe is reasonable to plan on over the life

of this plan, beyond what you are planning on.

And Mr. Caston has suggested there is more than that

potential for CHP, there's been difficulties getting it,

absolutely, but if half of that is available we're up at

12,000 megawatts between those two and if we can avoid peak

losses at 20 percent rate, we're at a nice number of 14,000

megawatts just for a little resonance here.

If -- I know you are not going to readily accept those

numbers are achievable, but it is perfectly clear if those

kinds of numbers are achievable, your plan right now

couldn’t accommodate it, could it?


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MR. SHALABY: Additional 14,000.

MR. POCH: Additional 14,000 megawatts.

MR. SHALABY: No.

MR. POCH: No, okay. Thank you, Madam Chair, I am just

about to move to interpretation of the directives and the

Reg and that is a good place to stop.

PROCEDURAL MATTERS:

MS. NOWINA: All right. Thank you. Before we leave,

Mr. Poch I have been thinking about the exchange between you

and Mr. Shalaby before the break. It was less than optimal

in my consideration for, in terms of helping the Board and

it didn't make me happy. We're going to be here together

for a long time and I thought I might indicate what might

make me happy, in future exchanges.

First, perhaps you could ask fewer leading questions or

ask more positive questions as opposed to the negative. For

example, such and such happened, didn’t it, or you didn't do

this. You might just ask what the OPA did do.

And I guess between both yourself and the witness,

please don't interrupt each other. Especially give the

witness time to pull their thoughts together, and if they

need to add a phrase afterwards, let's have enough of a

pause to know whether or not the witness would like to do

that.

And sometimes you would ask a question, and as

Mr. Shalaby started to give his answer, you would jump in

and give further explanation to your question. I don't

think you needed to do that. That may have been helping him


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more than you needed to and you could let him finish the

question.

So I think if you thought about those things, perhaps

tomorrow might go a little bit more smoothly and the rest of

our many days together.

MR. POCH: Thank you, Madam Chair. I will certainly

make best efforts. I admit to being -- pressuring myself,

watching the clock and maybe a little too much and not being

optimal in my pacing there.

MS. NOWINA: You are more or less first up and so my

directions to you are the same to everyone else as we go

forward.

Mr. Vegh, I had a question of you. We have been going

with 15 minute breaks. Is that working for your witnesses?

Is it long enough for your witnesses? You are not allowed

to talk to them. Witnesses, speaking for yourself and

colleagues going forward, is that workable for you?

MR. SHALABY: I think it is workable, yes. At this

pace it is workable. As long as we go home at 4:30, that's

good.

MS. NOWINA: We are trying to do that.

MR. SHALABY: Yes.

MS. NOWINA: We will try to maintain that. It is

efficient. I do like the hour-and-a-half for lunch because

I think it gives everyone the opportunity to get something

in between. Thank you very much.

We are now adjourned until 9 o'clock tomorrow morning.

--- Whereupon hearing adjourned at 4:40 p.m.


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· web viewin answering the question -- and once again, these are the planning criteria that you...

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