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ONTARIOENERGYBOARD

FILE NO.: EB-2007-0707

VOLUME:

DATE:

BEFORE:

6

September 16, 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 16, 2008,commencing at 9:02 a.m.

------------------VOLUME 6

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

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 (CanSIA)

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.

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

ONTARIO POWER AUTHORITY - PANEL 2, RESUMED 1A. Shalaby, A. Pietrewicz, Previously Sworn

Cross-Examination by Mr. Cunningham 1Cross-Examination by Mr. Rosekat 32Cross-Examination by Mr. Gourlay 39

--- Recess taken at 10:16 a.m. 50--- Upon resuming at 10:38 a.m. 50

Cross-Examination by Ms. Dover 50Cross-Examination by Mr. Murphy 86Cross-Examination by Mr. Cowan 108Questions from the Board 116Re-examination by Mr. Vegh 125

--- Luncheon recess taken at 12:55 p.m. 131--- Upon resuming at 2:33 p.m. 131

Procedural Matters 131

ONTARIO POWER AUTHORITY – PANEL 3 – REFERENCE FORECAST AND RESERVE REQUIREMENTS 133M. Adelaar, C. Bataille, V. Stein, Affirmed;L. Buja-Bijunas, K. Frecker, B. Gibbons, A. Pietrewicz, Previously Sworn.

Examination by Mr. Vegh 133Cross-examination by Mr. Shepherd 147

--- Whereupon hearing adjourned at 4:16 p.m. 193

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E X H I B I T S

Description _______Page No.

Exhibit No. K6.1: Document ENtitled, "Comparison of 20-Year Percentage Increases In Reference Forecast" 181

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

Description Page No.

UNDERTAKING NO. J6.1: TO PROVIDE THE ASSUMPTIONS UTILIZED BY THE OPA TO MEET THE NEW BUILD IN-SERVICE DATE OF 2018 71

UNDERTAKING NO. J6.2: TO PROVIDE A BRIEF EXPLANATION AS TO THE CHANGES IN THE ELECTRICITY USE THAT ARE DRIVING CHANGES IN THE GROWTH OF PEAK VERSUS ELECTRICITY 189

NO

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Tuesday, September 16, 2008

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

MS. NOWINA: Please be seated.

Good morning, everyone. Today is day 6 of the oral

portion of the review of the Integrated Power System Plan.

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. Before we begin cross-

examination, are there any preliminary matters?

None? For the Nishnawbe Aski Nation, Mr. Cunningham.

ONTARIO POWER AUTHORITY - PANEL 2, RESUMED

Amir Shalaby, Previously Sworn

Andrew Pietrewicz, Previously Sworn

CROSS-EXAMINATION BY MR. CUNNINGHAM:

MR. CUNNINGHAM: Yes, good morning, Madam Chair and

Board Members and OPA witnesses.

I just want to give a little bit of background

information about NAN, in case people don't know what NAN

is. NAN is the First Nations organization which represents

49 First Nations communities in northwestern and

northeastern Ontario and in what's called the far north,

communities north of the 50th parallel.

MS. NOWINA: I am going to stop and do a sound check,

Mr. Cunningham. Can everyone hear Mr. Cunningham at the

back? Is that a yes? Thank you.

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

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MR. CUNNINGHAM: Is that why they're leaving?

MS. NOWINA: They're still here, Mr. Cunningham. Go

ahead.

MR. CUNNINGHAM: The territory occupied by NAN

communities is 210,000 square miles, so it's a huge area.

It is actually two-thirds of the size -- two-thirds of the

province of Ontario.

Now, with respect to the IPSP, I have a number of

general questions about the planning process and planning

criteria for the OPA witnesses.

Mr. Shalaby, my first question is: Would you agree

that the IPSP is not a detailed 20-year action plan? It's

not the kind of plan that you are presenting saying, Damn

the torpedoes, this is where we're going to go in 20 years?

MR. SHALABY: There are no torpedoes in our story, no.

MR. CUNNINGHAM: Would you agree that the fact that you

are going to be reviewing this every three years indicates

that most of the data to be generated to determine the

prudence of an option has really yet to be generated,

because it's future oriented?

MR. SHALABY: That is a fair assessment, yes.

MR. CUNNINGHAM: So you have indicated the projects or

the procurements that you are actually asking approval for

this time around, and they're rather limited; correct?

There are a few gas facilities?

MR. SHALABY: Yes.

MR. CUNNINGHAM: I believe there are transmission

facilities, as well?


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MR. SHALABY: There is development work on transmission

options, yes.

MR. CUNNINGHAM: Okay. But apart from that, the bulk

of the plan really is going to be subject matter of future

appearances before this Board; is that correct?

MR. SHALABY: More of the plan will be incrementally

requested approval for as we proceed, yes.

MR. CUNNINGHAM: So in a sense, maybe what we're

looking at is approval for the tip of the iceberg at this

point?

MR. SHALABY: I -- not necessarily. I mean, the

requirements for Ontario are -- as we showed, is a large

level of commitment to the requirements over the next 20

years and we're requesting another increment today. And

there will be a bit more over the next several years.

So I don't think it is many more to go over the years.

So iceberg is probably not a very good analogy, no.

MR. CUNNINGHAM: With respect to the plan, though, in

addition to certain procurements that you are requesting

approval for, you are also more generally, I guess, asking

this Board to approve the planning criteria that you have

applied; is that correct?

MR. SHALABY: Yes.

MR. CUNNINGHAM: Okay. And --

MR. SHALABY: We came through that. I am going to

agree to what we agreed to before, the methodologies, the

logic, the compliance with Regulation 424 that asks us to

consider a number of things. So the precise nature of the


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approval is: Have we complied with Regulation 424,

including the large number of conditions laid out in that

particular regulation?

MR. CUNNINGHAM: Right. So you have the directives.

You have any application legislation, you have Regulation

424, and you have the criteria that you have identified that

come out of this general concept of sustainability; correct?

MR. SHALABY: That's correct.

MR. CUNNINGHAM: So if we can take a look at slide 8?

MS. NOWINA: Slide 8, which is Exhibit K.1?

MR. CUNNINGHAM: I think it is K1.1, yes.

Now, these are the six criteria, and I just want to

confirm, based on what I have heard thus far, that you are

saying that when you applied these criteria for the plan,

for the purpose of the plan, you didn't ascribe any

particular weight to the criteria; correct? Like, one

wasn't worth 30 percent, one wasn't worth 10 percent, et

cetera. Is that correct?

MR. SHALABY: Correct.

MR. CUNNINGHAM: Okay. And would you agree that

criteria or concepts, they're neither true for false? It is

not an issue of whether a concept is true or false. It is

really whether or not they're more or less useful to get you

where you want to go; is that correct?

MR. SHALABY: That's a reasonable description, yes, in

terms of costs that could be higher or lower. It's not true

or not, but it is more numerical and more quantitative in

the information it provides.


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MR. CUNNINGHAM: So in using these criteria for the

planning process, is it safe to say that the OPA felt that

these six criteria were the most helpful criteria in helping

you identify options for the future or to reach a particular

outcome?

MR. SHALABY: Yes.

MR. CUNNINGHAM: Okay. And with respect to the six

criteria, even though you didn't weight them for the

purposes of the plan, was there an attempt to apply these

six criteria in the same manner when looking at different

resource types?

So, in other words, when you were looking at applying

these for nuclear generating sources, did you apply them in

the same way to assess nuclear generating sources as you

applied them when you were looking at hydroelectric sources?

MR. SHALABY: We applied them in the same way, but

different resources exposed different vulnerabilities, and

there's reason, for example, to look at one or the other of

the criteria for one or the other of the resources.

So, for example, with nuclear...

MR. VEGH: I didn't realize it was one panel.

MR. SHALABY: So, for example, the feasibility of new

technology, when we're considering a new technology,

technology that is not in common use in Ontario, we focus

more on feasibility to start with.

If it passes the feasibility and -- we focus on

reliability, and then when it passes that, we look at

flexibility.


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Looking at hydroelectric resources, feasibility was a

large consideration in knowing what sites might be feasible

to deliver and to develop as an example.

So different resources raise different questions and

different resources command a different amount of

consideration at the different criteria, for example, but

there was no intent in weighing one more than the other.

MR. CUNNINGHAM: Okay. But in terms of their

application, are you using these criteria in a deterministic

way - that is, to help you reach a particular decision or

guide you to a decision - or are you using the criteria

after the fact, after you have made a decision, to justify

the decision you have made?

MR. SHALABY: We have done three things with these

criteria. One is to evaluate the options, the

appropriateness of using ingredients going into the plan, in

developing the plan itself, and then in describing its

characteristics and its performance.

So environmental performance is a criterion that is

descriptive. Cost is a criterion that is both used for

developing the plan and is descriptive.

So the criteria do three things: evaluate the options

going in, develop the plan itself, and then describe the

performance of the plan.

MR. CUNNINGHAM: Okay. I am not too sure whether you

have answered my question. Are you using these criteria to

guide your decisions to get to a particular outcome --

MR. SHALABY: Yes.


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MR. CUNNINGHAM: -- or are you starting out the outcome

and basically using them to justify your decisions?

MR. SHALABY: No. We're using them to guide us to an

outcome.

MR. CUNNINGHAM: In that case, wouldn't it have been

important for you to ensure that you apply the criteria in

an even-handed manner with respect to each of the resource

types?

MR. SHALABY: We did.

MR. CUNNINGHAM: Okay. Did the OPA ever prepare a

chart or a summary identifying along one side the six

criteria, the planning criteria, and then all of the

evidence that you garnered to deal with each of those

criteria for each of the resource options that you looked

at?

Is there some summary, a document that summarizes all

of that, so that you can show that option A was clearly

better than option B based on our six planning criteria?

MR. SHALABY: We did not prepare anything in the form

that you described.

MR. CUNNINGHAM: Why didn't the OPA do that? Because

that would summarize your entire project.

MR. SHALABY: I am not sure -- how would you find that

an option was clearly better than any other option? Options

are suitable for a specific role and a specific time.

There is no worse or better. There is a fit between

the options that creates a plan that works.

MR. CUNNINGHAM: Well, I am a bit confused, because


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you're saying there is no worse or better. Isn't the whole

exercise of planning to ensure that you choose the most

effective route to get to a particular destination?

MR. SHALABY: The most effective combination that

complies with government goals and with the criteria that we

developed.

MR. CUNNINGHAM: Right. But you didn't prepare a

summary, then, right, of all of the evidence you garnered

for each option you looked at?

MR. SHALABY: We described each option. We described

its features. We described how we used the criteria under

every evidence section in the D section, D-2-1, D-3-1,

D-4-1, D-5-1. All along, we show how the criteria were

applied to each, renewable resources and unrenewable

resources, conservation resources and so on.

Stay tuned, you will hear all of that in the next

weeks.

MR. CUNNINGHAM: Okay. With respect to the evidence

that the OPA has put forward, I would like to refer you to

slide number 6 because I am still a bit confused as to what

really is left in this plan to be scrutinized by the Board.

Slide number 6 you know talks about the prefiled

evidence, August 2007 and the updated evidence, August 2008.

Would you agree that in the span of one year we have seen

significant change, in terms of the factual reality that, on

which this plan sits?

MR. SHALABY: Yes.

MR. CUNNINGHAM: Okay. And so with respect to the plan


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now, in terms of what this Board is looking at, are we

looking simply at the planned portion of the updated

evidence?

MR. SHALABY: We're looking at it in the context of the

-- all of the resources, but, yes, those are the decisions

that are yet to be made and it's even a subset of that, not

all of that, but a subset of that that comes in the front

end of that.

MR. CUNNINGHAM: What do you mean a subset of that? Of

the planned portion, because that's the stuff you haven't

committed to at this point; correct?

MR. SHALABY: Yes. Only the things that need approval

at this time are we seeking approval for.

MR. CUNNINGHAM: Okay. So there are things within the

plan category that don't need OEB approval.

MR. SHALABY: At this time, yes.

MR. CUNNINGHAM: Okay, at this time. But over the

course of the plan, the 20 years, you expect that you will

need approval for everything in that category; correct?

MR. SHALABY: Yes.

MR. CUNNINGHAM: Okay. Of that category, when I add up

the megawatts that you are looking to deal with, in terms of

the total power supply that would have to be the subject of

approvals by the OEB over the next 20 years, are we looking

at about 16,000 megawatts there?

MR. SHALABY: That's a good enough estimate.

MR. CUNNINGHAM: Okay. And of that --

MR. SHALABY: We have the details, but I don't suspect


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you want the detail.

MR. CUNNINGHAM: I just wanted a ballpark figure.

We're looking at basically over the next 20 years you want

this Board to approve resources capable of producing 16,000

megawatts; is that correct?

MR. SHALABY: That he the planned resources at this

time, yes.

MR. CUNNINGHAM: Okay. Does that involve CDM as well?

Is CDM part of that?

MR. SHALABY: Yes.

MR. CUNNINGHAM: So in other words, you're really not

asking for approval of 16,000 megawatts worth of power to go

through the system, because if CDM approvals are asked for

-- what CDM really says is that part of that 16,000

megawatts isn't going to materialize. Correct?

MR. SHALABY: We do need approval for procurement of

conservation, that's correct.

MR. CUNNINGHAM: So those are the programs to convince

people to use energy; correct?

MR. SHALABY: To use it more efficiently, yes.

MR. CUNNINGHAM: But in terms of CDM, you are really

talking about two basic things. One is you're trying to

convince people not to use electricity, to cut down on their

use.

MR. SHALABY: I modified that, to use it more

effectively or more efficiently. And we have categories in

conservation.

MR. CUNNINGHAM: One of the things is like, Don't turn


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your lights on when you don't have to; correct?

MR. SHALABY: Conservation is much more sophisticated

and much more broad than the way you describe it here.

MR. CUNNINGHAM: But at its basic level, you are either

asking people not to use as much electricity in the future,

or you are asking them to shift the timing of their use;

correct? At its very basic feature.

MR. SHALABY: No. At a basic level, we are asking

people to use electricity more effectively, to shift from

one fuel to another, to shift the timing of the use of

electricity, and to generate electricity on their own

premises.

MR. CUNNINGHAM: How do I use electricity more

effectively? Really what you're saying is if I am using

more effectively, I am using less of it than I would

otherwise use, correct.

MR. SHALABY: But it's not use not using electricity.

It's keep the refrigerator going, keep the lights going, but

use less electricity.

MR. CUNNINGHAM: Okay. But ultimately what I am asking

you is of the 16,000 megawatts, because CDM is a component

in that, are you not really saying that we're not talking

about the actual use of 16,000 megawatts over the next 20

years, because if CDM is successful, we will only use maybe

12,000 megawatts?

MR. SHALABY: That much I can agree to. The supply-

side, the supply-side of this 16 is 12 out of 16, yes.

MR. CUNNINGHAM: Right. So we see the plan shrinking


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even more, then, in terms of the actual resources you are

asking for approval of, to generate electricity.

MR. SHALABY: Well, that's where I disagree. To

achieve the conservation, you require expenditures. That is

resources.

MR. CUNNINGHAM: Okay, but let me ask you this. CDM,

what electricity does CDM generate? It doesn't generate any

electricity; correct?

MR. SHALABY: It generates, one of the categories is

customer-based generation. That generates electricity.

MR. CUNNINGHAM: Okay.

MR. SHALABY: It generates -- it generates benefits for

the consumer.

MR. CUNNINGHAM: Okay. Sorry.

MR. SHALABY: It generates benefits for the consumer at

lower electricity use.

MR. CUNNINGHAM: Okay. But one of the benefits of CDM

is that it doesn't -- it causes people to use less

electricity than they otherwise would.

MR. SHALABY: Yes.

MR. CUNNINGHAM: Okay. So in terms of CDM being

presented as a resource, because I have seen a lot of

discussion in the materials about it being a resource, I am

trying to wrap my mind around this. It's not a tangible

thing; correct?

MR. SHALABY: I am not agreeing to that.

MR. CUNNINGHAM: Well, how is people not using the

electricity they otherwise would use or people shifting the


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timing of their electricity use to off-peak hours, how is

that an actual tangible resource?

MR. SHALABY: It is a more effective -- it's a more

efficient chiller, it's better refrigerators, is it more

effective lighting. It is controls. It is sensors. It is

all kinds of technologies that the next panel or two will

get into in more detail.

It is a very tangible and a very active resource to

reduce the demand for electricity.

MR. CUNNINGHAM: Okay. But in terms of asking this

Board to approve hardware to generate electricity or

hardware to transmit electricity, would you agree that, in

terms of the planned area on the slide number 6, we're

really talking somewhere maybe around 12,000 megawatts,

then, over 20 years?

MR. SHALABY: For the supply side, I agree with that,

yes.

MR. CUNNINGHAM: So if we consider, you know, the

mandate of this Board in terms of approving hardware to

actually generate or transmit electricity, we see the plan

shrinking even more; correct?

MR. SHALABY: If you want to scope it to that portion

of the integrated plan, I agree with that. But the Board

has a large role to play in the conservation side as well.

MR. CUNNINGHAM: Okay. The other question I have and

it kind of struck me when I was looking at the plan, when

you sort of stand back, why wasn't the planning process used

to identify the supply mix that Ontario should be pursuing


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during the next 20 years?

MR. VEGH: Madam Chair, this is getting into the issue

of how the Minister of Energy set the supply mix, and that's

clearly not an issue before this Board.

MR. CUNNINGHAM: Well, here's what -- I mean, Mr.

Shalaby is here to answer questions on the planning process

and I am asking whether, really a question that goes to the

prudence of the planning process that they chose.

MR. VEGH: No, I'm sorry. If I may, Madam Chair, sorry

to be speaking again.

MS. NOWINA: Go ahead, Mr. Vegh.

MR. VEGH: The legislation is clear that the minister

sets the supply mix and the OPA, then, tries to implement

that supply mix.

So we're not going to be reviewing the prudence of that

division of authority that the legislature has granted to

the minister and to the OPA. And the Board's decision on

issues day was very clear about the respective roles of the

minister, the OPA, and the OEB in that the minister sets the

supply mix, the OPA comes up with a plan to meet that mix,

and then the OEB reviews that plan by reference to its

mandate.

MS. NOWINA: Let me put a bit of a box around Mr.

Cunningham's questions, then. Mr. Shalaby himself, I think,

in this proceeding has talked about planning in two phases.

He has talked about the planning which went into the supply

mix advice that one assumes went into the directive. And

then he has talked about the planning for the IPSP.


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I think if Mr. Cunningham has questions about how one

of those inform the others or what type of planning went

into the second phase of planning, because the first phase

of planning had taken place, that those kinds of questions

are fair.

MR. CUNNINGHAM: Well, I guess maybe my question is

more general, then. The IPSP is not really a plan that

says: Here's where we should get to, in terms of resource

types during the next 20 years; correct? It doesn't say

that?

MR. SHALABY: These are the goals that are set by the

Minister. Exhibit B-3-1 talks about three stages: One is

setting the goals, developing the goals of the IPSP and that

is ministerial responsibility; developing the IPSP, that's

an OPA responsibility; reviewing the plan, and that's an OEB

responsibility; and we talked about the implementation by a

large number of developers and proponents and companies

post-approval.

MR. CUNNINGHAM: I guess my question would be, then,

and it's a general one, and I think you are competent to

answer it: Do you think it was a prudent decision to keep

the -- to identify the supply mix first, and then just

restrict the planning process to determining the routes that

you could take to get there?

MS. NOWINA: Mr. Cunningham, I don't think that that

question is in scope.

MR. CUNNINGHAM: With respect to CDM, I have a number

of questions about that.


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Would you agree, at the very least, Mr. Shalaby, that

CDM is something different from the other supply mix

options, because it doesn't involve the development of

hardware or tangible objects to generate electricity or

transmit electricity?

MR. SHALABY: I agree it is different -- every option

we talked about has different characteristics, so I will

agree to the first part of your proposition, but not to the

second part. It is hardware, and it is technology, and it

is it behaviour, and it is rate structures, and it is smart

meters and smart customers. It is a lot of things.

MR. CUNNINGHAM: Okay. So in terms of hardware, what

hardware are we talking about? Smart meters we understand.

MR. SHALABY: We talked about more effective chillers.

We talked about more effective lighting, talked about

controls, talked about communication devices. And the

supply -- the panels that will follow can tell you a little

bit more about specific technologies, if you are interested.

MR. CUNNINGHAM: It is aimed, though -- when you said

to use electricity more effectively, what you're really

saying is to use it more efficiently so we get bigger bang

for our buck; right? We basically do the same processes

that we're doing now, but we use less electricity to do it?


MR. CUNNINGHAM: Okay. Would you agree that some of

the agencies that have responsible for supplying power in

the province in the past have not been big proponents of

conservation and demand management and -- for example, the


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OPG? Would you agree that OPG has not been a real player,

historically, either in its form as OPG or Ontario Hydro in

the past, in trying to convince people to use less

electricity in the province?

MR. SHALABY: No, I don't agree with that.

MR. CUNNINGHAM: Well, wouldn't you agree there is an

inherent sort of, I would say, institutional dynamic for a

generator of power not to want to get smaller? They want to

get larger?

MR. SHALABY: I don't want to speculate on dynamics and

company motives, and so on. But at the time of Ontario

Hydro's integrated existence, the demand management and

efficiency was a very active part in the late '80s and early

'90s. It took a lower profile after that. It took higher

profile before that.

Throughout the phases of electricity development in

Ontario, there were different degrees of emphasis, some

within the integrated the utility, some with the

distributing utilities, some with outside companies.

So it is finding its way outside the utility world and

not just with the utilities at this time.

MR. CUNNINGHAM: Okay. With respect to CDM being a

resource, isn't it really a bunch of measures? When you get

down to its essence, it is a bunch of measures to convince

consumers in Ontario not to use a real resource - that is,

electricity - or at least to use it more effectively so we

don't use as much electricity as we would normally

anticipate?


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MR. SHALABY: We have been through that, yes.

MR. CUNNINGHAM: So it's a resource in a sense to

convince us not to use a resource?

MR. SHALABY: I don't want to split hairs again, but it

is to use it more effectively, is a better way of describing

it.

MR. CUNNINGHAM: Okay. One of the things that struck

me was CDM is the sort of first line of attack to deal with

anticipated demand in the future; isn't that correct?

MR. SHALABY: It is the priority, because it's a lower

cost. It's the shortest lead time. It is -- it's got a lot

of advantages that makes it the most preferred option, yes.

MR. CUNNINGHAM: So in terms of what you have to first

do, if you're talking about any kind of resource to develop

over the next 20 years, is you had to establish what you

thought was going to be the demand on the system over the

next 20 years; correct?

MR. SHALABY: That is one of the early steps.

MR. CUNNINGHAM: Wouldn't you agree that using CDM as

your first sort of plan of attack to deal with anticipated

demand, that that would actually give the OPA an incentive

to overstate the anticipated demand going forward?

MR. SHALABY: No.

MR. CUNNINGHAM: The reason why I am suggesting this is

that to the extent that you overstate the demand and you

say, Our first way of knocking this demand down is

conservation and demand management, and if the demand that

you've identified is likely going to occur in the future


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doesn't materialize, then you can say, Well, our first plan

of attack, CDM, has been wildly successful.

MR. SHALABY: I am disagreeing with that.

MR. CUNNINGHAM: Wouldn't you agree there is some truth

to that, that using CDM as your first plan of attack does

give you a margin of error, in terms of your demand

forecasts?

MR. SHALABY: It's the third time you asked the

question. The answer remains "no".

MR. CUNNINGHAM: Another question I have deals with the

way that the data has been presented in the materials from

the OPA --

MR. SHALABY: And the evaluation of programs will be

described by former -- subsequent panels. Conservation is

not just, Look at it, it's not here, it must have happened.

There is rigorous evaluation. There is rigorous tracking of

the spending and the impact of the conservation spending.

Those are the reasons I am disagreeing with you.

MR. CUNNINGHAM: Don't you agree if you have predicted

that, let's say, in five years we're going to be using

30,000 megawatts a day, right, on average, and five years

from now we have 25,000 megawatts of demand on the system,

actual demand, that by the fact -- the mere fact you have

put CDM as the first plan of attack allows the OPA to stand

back and say, It looks like we've been incredibly successful

in getting that demand down from 30,000 down to 25?

MR. SHALABY: Can I address the Panel just to

demonstrate that we haven't done that when demand is lower


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in 2007, 2006. We say demand is lower and it is for a

number of reasons: the economy, the restructuring of the

economy and conservation, all three reasons, and the

climate, weather.

There are many reasons to explain the change in demand,

and we have not demonstrated the behaviour that you are

talking about of claiming it is all conservation. We

haven't done that. So the record shows we haven't done

that.

MR. CUNNINGHAM: But the potential exists for that to

be done; correct?

MR. SHALABY: The potential exists for all kind of

possibilities, but the record shows that we haven't done

that.

MR. PIETREWICZ: Specifically, I think Mr. Shalaby is

referring to Exhibit B-1-1, pages 7 and 8, where we discuss

the recent levels of observed demand in Ontario, and on page

8, line 1 of B-1-1, we state that:

"At this point it is not possible to provide an

explanation for the difference with any level of

certainty."

And we go on to describe, as Mr. Shalaby has, that it

is likely a factor -- a combination of the economy,

potential of conservation. So this is the reference Mr.

Shalaby was making.

MR. CUNNINGHAM: Is the OPA saying, then, ultimately,

in the grand scheme of things, you're not going to be in a

position to determine the effectiveness of your CDM plans?


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MR. SHALABY: We will be.

MR. CUNNINGHAM: You will be?

MR. SHALABY: In time, we will evaluate all of the

programs and we will be able to determine the effectiveness

of programs, yes.

MR. CUNNINGHAM: How do you evaluate the effectiveness

of a CDM program? Because you are really saying, Here's our

predicted demand and it didn't materialize, so it has to be

because of something we did in terms of conservation demand

management. How do you evaluate that?

MR. SHALABY: Stay tuned. The panel on conservation

has a section on evaluation, techniques for evaluation.

It's a measure that the Board here insists on in approving

conservation expenditures. It has done that for gas

companies, electricity companies, for many years.

It is a well-established discipline, and it will

continue to develop and inform conservation programming and

evaluation in Ontario.

MR. CUNNINGHAM: But the other day you pointed out to

the Board, and to one of the lawyers who was cross-examining

you, that it is the hardest of all of the resource types to

prove that it's actually been effective; correct?

MR. SHALABY: I could be reminded. I could benefit

from a reminder of that.

MR. CUNNINGHAM: I don't have the section in front of

me. This is a slide that was put up in front of us about

how the causal connection between your CDM measures and

actually reducing demand, that was the hardest causal


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connection --

MR. SHALABY: I think if you give me the quote, I would

be better able to comment on what you are saying.

MS. NOWINA: Mr. Cunningham, before you continue, you

gave me an estimate of 45 estimate. You have less than 15

left and it seems like you have gone over the same territory

rather thoroughly. So if you have other areas you want to

move to, you don't have a lot of time remaining.

MR. CUNNINGHAM: I guess what I would like to do is to

move on to the issue of participation in the plan. I would

like to just confirm that in terms of the mandate of the

OPA, under section 5(1)(f) this is really the mandate, one

of the objects of IESO but it relates to the OPA, because

under section 5(1)(f) of the Electricity Act, it states that

one of the objects of IESO is:

"to collect and provide to the OPA and the public

information relating to the current and short-term

electricity needs of Ontario and the adequacy and

reliability of the integrated power system to meet

those needs..."

MR. VEGH: You are referring to the Electricity Act?

MR. CUNNINGHAM: Yes, section 5(1)(f). So is it safe

to say one of the OPA's role --

MR. VEGH: Give him a chance to read it.

MR. CUNNINGHAM: -- is to collect such information for

planning purposes, that is information on the current and

short-term electrical needs of Ontario?

MR. SHALABY: Yes.


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MR. CUNNINGHAM: Okay. That's for your overall

planning function; correct?

MR. SHALABY: It informs our planning function, yes.

MR. CUNNINGHAM: Then we have seen previously the

objects of the OPA outlined in section 25.2(1). That is:

"to forecast electricity demand and the adequacy

and reliability of electrical resources for

Ontario in the medium and long term..."

So you are to collect information on the short-term and

current needs of Ontario and then also you are to forecast

demand for the medium and long term; correct?

MR. SHALABY: That's correct. Elsewhere in the act it

talks about the IESO-controlled grid as the scope of

planning.

MR. CUNNINGHAM: Okay. Now, in terms of the OPA, we

have looked at other sections. We looked at section 25.29.

We have looked at section 25.30, in terms of the OPA's

mandate. I won't go over those.

We have looked at 424/04, the regulation. And we have

looked at 2(1)(1), that:

"The OPA shall, in addition to following the

minister's directives, consult with consumers,

distributors, generators, transmitters and other

persons who have an interest in the electricity

industry in order to ensure that their priorities

and views are considered in the development of the

plan."

Correct?


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MR. CUNNINGHAM: That would be basically almost every

consumer in Ontario.


MR. CUNNINGHAM: Okay. So what I would like to do is

to quickly look at NAN's evidence, in terms of what was said

to NAN by the OPA and by the Ministry. NAN's evidence is

found at Exhibit L, tab 18, schedule 1, page 21. There is

an excerpt here from a letter from the OPA to the Temagami

First Nations. I am looking at the second paragraph of that

excerpt.

MR. SHALABY: Give me a second, thank you.


MR. SHALABY: All right. I see it.

MR. CUNNINGHAM: Okay. The second paragraph of that

excerpt, it states, in part:

"It is a plan put together through the hard work

and utilization of the skills and experience of

many people to lay out a road map for the

development of electrical power in the province.

It is still up to each First Nation, each

community, each company participating in the

economic development of the province of Ontario to

decide how they wish to 'use the road map' to get

to a particular destination."

So would you agree that that language indicated that

this plan was going to be inclusive; right? First Nations

were going to be able to rely on this plan to get where they


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wanted to get, possibly, in the future?

MR. SHALABY: I indicated that the act also indicates

that the power system plan, the integrated power system plan

is to, the scope for it is the IESO-controlled grid.

MR. CUNNINGHAM: Correct.

MR. SHALABY: So it is inclusive. There's some remote

communities that are remote from the IESO-controlled grid

that are not subject to this particular plan. So subject to

that caveat, I'm agreeing with what you say.

MR. CUNNINGHAM: If we look at --

MR. SHALABY: First Nations that are on the IESO-

controlled grid are certainly part of the plan.

MR. CUNNINGHAM: But the grid as it looks today won't

be the grid that -- as it looks 20 years from now; correct?

MR. SHALABY: That may be true.

MR. CUNNINGHAM: So how can we take the current notion

of the grid to say to someone, over the next 20 years you're

not going to be part of the plan? Isn't part of the --

shouldn't part of the plan be to ensure these people get

connected to the grid?

MR. SHALABY: No.

MR. CUNNINGHAM: No?

MR. SHALABY: No.

MR. CUNNINGHAM: So your plan is just simply about

supplying resources; that is basically -- I have put in our

materials the philosophy of the plan seems to be: Ask not

what the grid can do for you but ask what you can do for the

grid.


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MR. SHALABY: No. I am disagreeing that the objective

of the plan is to connect everyone to the grid. There are

some communities that it is going to be very, very expensive

and very remote to connect to the grid. There are

communities that are being connected to the grid over time,

Attawapiskat, south all the way to the Moosonee, for

example, have been connected by a line built by Five

Nations. That has taken place over the last several years

and connected a number of communities.

There are other communities in the NAN territory that

are being connected, as well, two, in particular. So over

time, as economics permit and as use and options develop,

there will be connection to the grid.

But I would not say that one of the objectives is to

connect all of the remote communities. Some of them are

very remote and very small and probably the most economic

thing is to continue to be supplied the way they are, with

more effective technologies, perhaps.

MR. CUNNINGHAM: You are aware 26 of the 49 NAN

communities are not connected to the grid. Are you aware of

that?

MR. SHALABY: I am, yes.

MR. CUNNINGHAM: You are aware that the OPA, in answer

to interrogatories from NAN, indicated to them, in writing,

that, Oh, by the way, if you're not on the grid, you are not

part of our plan.

MR. SHALABY: That's what I am indicating. The scope

of the integrated power system plan is the IESO-controlled


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grid.

MR. CUNNINGHAM: Okay. Where do you find that in the

legislation or the regulations, that the people not on the

grid should be excluded from this plan?

MR. SHALABY: It's in the act. The definition of the

IPSP is the IESO-controlled grid.

MR. CUNNINGHAM: Well, I see the definition, but the

fact is your whole plan entails a different grid 20 years

from now than the one we currently have; correct?

MR. SHALABY: I can accept that, yes.

MR. CUNNINGHAM: Because you have transmission lines

you want to build.

MR. SHALABY: Yes.

MR. CUNNINGHAM: Okay. Well, why haven't you put in

your plan a plan to connect communities to the grid instead

of just connecting new generating sources to the grid so you

can bring the power down to central Ontario? Why isn't part

of the plan the development of the transmission system to

reach out to the outlying and remote communities?

MR. SHALABY: Panel, I described the focus of the plan

as the IESO-controlled grid. We are aware of the subsidiary

of Hydro One that delivers and services many of the remote

communities. The remote communities are partly serviced by

Hydro One subsidiary, and partly not. Some communities are

independent, supply their own power. So they can choose to

be served by Hydro One or not.

The Department of Indian Affairs has agreements with

many of the communities to supply power. It is that


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subsidiary of Hydro One that has a better knowledge of the

communities, and it receives directives and does connect

consumers to the distribution grid, the 44 kV system

typically. So it is lower voltages. It is remote

communities. We simply recognize the different nature of

the remote communities and it's a very different nature of

planning that the IESO-controlled grid.

MR. CUNNINGHAM: I am not sure you answered my

question. I just want to refer you to one last slide in my

questioning. Slide 65. Because this is right on point.

Would you agree over the next 20 years, the OPA is

contemplating developing considerable hydroelectric

resources in northwest and northeast Ontario?

MR. SHALABY: Yes.

MR. CUNNINGHAM: Slide 65 follows slide 63 and 64,

which show the cumulative development of these resources;

correct?

MR. SHALABY: Yes.

MR. CUNNINGHAM: Okay. Would you agree that the

objective, based on these diagrams, seems to be we'll

develop these power generating sources and we will get the

power down to central Ontario?

MR. SHALABY: Yes.

MR. CUNNINGHAM: What about all of the communities,

that are basically my clients, that lie around these two

sources to be developed? Where is the plan to connect them

to those sources of power? Would you agree there isn't one?

MR. SHALABY: I indicated that this was not the scope


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of the integrated power system plan, because it is looked

after in a different forum by different people, and we

didn't want to duplicate work that is done by other people

and is not our mandate to do.

MR. PIETREWICZ: Examples of work that is being done by

other people can be found, if it helps, in the OPA's

response to NAN Interrogatory No. 6.

MR. CUNNINGHAM: With the greatest of respect, that

wasn't my question. My question was: Why didn't the OPA

include in its plan transmission lines from these sources

that are going to be developed in the backyard of my clients

to connect my clients to those sources of power?

You are here to serve all Ontarians, all consumers.

You are supposed to have all of their interests at stake

when you develop the plan.

MR. SHALABY: I have answered the question more than

once.

MR. CUNNINGHAM: You can't point me to any regulatory

source that says you were to ignore the interests of my

client?

MR. SHALABY: I can, and I did.

MR. CUNNINGHAM: Well, I would like an undertaking for

you to identify those provisions.

MR. SHALABY: I can do it right now.


MR. SHALABY: It's in the act.

MS. NOWINA: Maybe Mr. Vegh can do it for us now. Mr.

Vegh.


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MR. VEGH: Thank you. I think Mr. Shalaby was

referring specifically to the definition of the integrated

power system in the Electricity Act, which reads as follows:

"The integrated power system means the IESO-

controlled grid and the structures, equipment and

other things that connect the IESO-controlled grid

with transmission systems and distribution systems

in Ontario and transmission systems outside of

Ontario..."

And then the IESO-controlled grid is defined in the

Electricity Act, as well. It's defined as:

"The IESO-controlled grid means the transmission

systems with respect to which, pursuant to

agreements, the IESO has authority to direct

operations..."

I think those are the sections that Mr. Shalaby was

referring to.

MS. NOWINA: Just so I can be clear, Mr. Vegh, so those

sections refer to the definition of the integrated power

system. It's not in the sections relating to the integrated

power system plan?

MR. VEGH: It's the definition of the integrated power

system, and if you go to section -- the term that is used in

the -- in part 2, point 2 of the act, it talks about the

integrated power system plan.

So if you look at the definition of integrated power

system, it is the IESO-controlled grid. So the integrated

power system plan is a plan for the IESO-controlled grid.


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MS. NOWINA: Thank you.

MR. CUNNINGHAM: I have one last question for Mr.

Shalaby.

Prior to the OPA answering the -- really I think it was

interrogatories 5 and 6 from NAN, where they indicated that

you are not part of the grid right now, so you are not going

to be part of our plan for the next 20 years.

Prior to them giving that notice, did the OPA ever

write to my client, during the development of the IPSP, to

tell them, Look, we have to tell you, 26 of your 49

communities, we're not going to be dealing with their

interests in terms of future power supply? Did you ever do

that during the process?

MR. SHALABY: We wrote to the communities, and the

supply of service is not limited to connection of

transmission lines to the communities. It is also inclusive

of the use of electricity, advice on conservation, advice on

renewable options, and there are channels and there are

programs for renewable options and for conservation of power

to these communities. So we did not write to that effect.

We wanted communities to be included in the discussion,

and that was the general communication, and that's described

in Exhibit C-1-1.

MR. CUNNINGHAM: Are you aware of the Minister of

Energy ever writing to our clients, during the development

of the IPSP, to tell them that if you're off the grid right

now, you are not going to be part of the plan?

MR. SHALABY: I am not aware of that.


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MR. CUNNINGHAM: Okay. Those are my questions, Madam

Chair.

MS. NOWINA: Thank you, Mr. Cunningham. Next, Mr.

Rosekat for the FNEA.

CROSS-EXAMINATION BY MR. ROSEKAT:

MR. ROSEKAT: Good morning, Mr. Shalaby. Sorry, I am

in the third row here, but I think we can probably see each

other. I just have a few questions about the procurement

process.

As with previous counsel, if my questions are too

detailed, which I somehow doubt, just direct me to hold my

questions for the procurement panel.

I am a bit confused, so you will have to pardon me if

my questions seem a little naive. The process that you are

asking the Board to approve is the one that is set out -- we

don't have to go to the document specifically, but the one

that is set out in Exhibit B-2-1. That's the process by

which the OPA determines, for instance, the type of

procurement, the design of the procurement, and what you

state as approvals, which I take to be OPA board of

directors' approvals for the procurement; is that correct?

[Witness panel confers]

MR. SHALABY: Yes.

MR. ROSEKAT: Just to clarify, because it is not always

clear from the evidence, the OPA's authority to procure

certain resources comes from having an approved IPSP or

government directives. The procurement process is simply

the mechanism by which those resources are procured?


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MR. ROSEKAT: The Board's approval of the procurement

process doesn't grant the OPA any particular authority to

procure; correct?

MR. SHALABY: Together with the approved plan and the

directives, as you --

MR. ROSEKAT: But approval of the process doesn't give

the OPA any extra authority to approve?

MR. SHALABY: It gives it authority to follow these

processes in procurement.

MR. ROSEKAT: Right. The Board approval simply says,

This procurement process that you have put forward, we

believe it is appropriate?


MR. ROSEKAT: In determining whether the process is

appropriate, because that's what it says in the direction,

presumably the Board is looking to see that the process

complies with the procurement principles, for instance, set

out in the regulation?


MR. ROSEKAT: If we can just go to slide 113 of Exhibit

K1.1 for a moment?

I think it is fairly clear, but I just want to confirm,

the OPA seems to be saying in this slide that the

procurement process which you are asking the Board to

approve will not be used for procurements under government

directive.

For instance, if we take the 2,000 megawatt directive,


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procurements under that directive will -- because those are

all, you know, renewable supply procurements, right, they

will not follow the procurement process you are asking the

Board to approve?

MR. SHALABY: There is a procurement panel that comes

in that can -- the witnesses that described this part of the

overview are going to be appearing in a procurement panel.

They will get into that level of detail of what the process

is used for or not used for. Perhaps they will be better

able to describe what they intended in this.

MR. ROSEKAT: Absolutely. I am happy to save my

questions for the procurement panel.

In terms of -- I know -- in terms of the directives

that were issued for procuring certain renewable supplies,

for instance, do you know why these procurements might have

been issued rather than simply waiting to include them in

the IPSP?

MR. SHALABY: The urgency for needing the resources,

the timeliness of this process and the timeliness of the

need of the resources, it's just a --

MR. ROSEKAT: You needed to get going?

MR. SHALABY: The government felt that we have to get

going on them to have them in time.

MR. ROSEKAT: Thank you. Now, you indicated earlier -

I think you went over it with the Board Staff and probably

more than one lawyer who has cross-examined you, including

Mr. Cunningham, I think - the procurement process, there is

no automatic review after three years for the procurement


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process?

MR. SHALABY: You indicated we went through it. The

record stands. There's been a lot of discussion in that

matter, yes.

MR. ROSEKAT: Fair enough. I think your response to

that was your intention was to build enough flexibility into

the procurement process that constant reviews would not be

necessary; is that accurate?

MR. SHALABY: Would not be necessary, but we could come

forth if we feel it is necessary, yes.

MR. ROSEKAT: Can you give -- think of a hypothetical

example of what change might require you to come back and

re-review and re-approve the procurement process?

MR. SHALABY: Again, maybe the people who are more

expert in procurement processes and the nature of the

requirements that they're asking approval for can better

describe the anomalies.

MR. ROSEKAT: Fair enough, thank you.

Once you go through all of the elements of the

procurement process, the procurement is then launched and I

assume that the process continues into the next phase,

between a launch of the procurement and the award of the

contract. I want to sort of talk about this as the contract

award process, the phase of the process. It's still part of

the procurement, but the procurement process that you have

set up only sort of goes out to the design of the

procurement, deciding on the type of the procurement and

what approvals the OPA board has to grant. There is another


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sort of phase once you launch the procurement, there's the

RFP process, or the tendering or auction process. Right?

MR. SHALABY: Well, that is part of the procurement.

MR. ROSEKAT: That is part of the procurement. It is

not dealt with specifically in the process, I think, because

it may be a little more detailed than you wanted to get into

that in that.

But that process, that part of the process continues to

be part of the procurement is what you're saying?

MR. SHALABY: Yes.

MR. ROSEKAT: Then presumably, the principles set out

in section 3 of the procurement regulation would continue to

apply to that phase of the process? If you want to direct

your attention to the principles --

MR. SHALABY: You may be getting into a stage where the

procurement people are better able to answer that. You're

referring to regulation 426?

MR. ROSEKAT: I am.

MR. SHALABY: I would rather you ask these questions of

the procurement panel.

MR. ROSEKAT: Fair enough. Then perhaps we could go to

the transcript of day 3. You were being cross-examined by

Mr. Thompson. At page 125, I believe it is line 18 or 19.

Page 125.

MR. SHALABY: Yes. What part specifically?

MR. ROSEKAT: Line 18, Mr. Thompson says:

"So that to the extent, then, that the directives

trigger procurements that are outside of any


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regulatory screening, we don't have any

transparent planning or screening process that's

governing the customers' obligations to pay those

amounts; is that fair?"

Your response was:

"The board of directors acts in its capacity, in

its fiduciary capacity to screen and ensure that

these contracts are in the best interests of

consumers."

MR. SHALABY: Yes.

MR. ROSEKAT: My question to you is this: If the board

of directors is acting in a fiduciary capacity with respect

to consumers when it is deciding to award contracts under

directives, who is doing what would ordinarily be done under

the regulatory screening? Who is ensuring that the

principles apply to the procurement?

MR. SHALABY: Perhaps you can expand on what principles

and -- you can address that to the procurement panel

further.

MR. ROSEKAT: Fair enough.

MR. SHALABY: There's review here. What to purchase.

What to procure. How to procure it. There is a board of

directors that oversees the process. Perhaps you can be

more specific, what is it that...

MR. ROSEKAT: Sorry. I am still referring to the

principles in the procurement regulation and I am wondering,

I just wanted to expand on your answer a little bit. You

said the OPA board of directors are acting in a fiduciary


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capacity to customers.

My question is, as part of that responsibility, are

they also ensuring that the procurement principles set out

in regulation 426 have been followed, have been complied

with?

MR. SHALABY: The regulations govern the way

procurements are to be carried out and to be designed, and

the board of directors holds the staff accountable for

carrying out these processes, yes.

MR. ROSEKAT: So the answer is yes?

MR. SHALABY: Yes.

MR. ROSEKAT: Part of their role is also to make sure

that staff have done what they are supposed to do?

MR. SHALABY: Yes.

MR. ROSEKAT: Thank you.

Would it be possible, after the IPSP is approved, for

the government to continue to issue directives?

MR. SHALABY: We talked about that as well.

MR. ROSEKAT: And the answer was yes?

MR. SHALABY: The answer was yes, depending on whether

the initiatives are underway before the approval is granted,

or not. Generally that was the answer to that.

MR. ROSEKAT: Oh, I see. And I apologize, I did try to

read through most of the transcripts last night and the days

previous. But if the directives are outstanding, there is

the transition provisions, I understand.

MR. SHALABY: If the initiative is outstanding.

MR. ROSEKAT: If the initiative is outstanding?


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MR. SHALABY: Yes.

MR. ROSEKAT: Okay.

And I am going to be directing most of my questions to

the procurement panel, then, so those are the only questions

I have for you, Mr. Shalaby.

MR. SHALABY: I will let them know. Thank you.

MS. NOWINA: Thank you, Mr. Rosekat.

Mr. Keizer? GLPL? Not here. Mr. Gourlay?

MR. GOURLAY: Here, Madam Chair.

MS. NOWINA: Do you want to go ahead, Mr. Gourlay?

MR. GOURLAY: Yes, please, can you hear me?

MS. NOWINA: Yes.

CROSS-EXAMINATION BY MR. GOURLAY:

MR. GOURLAY: Good morning, gentlemen. In the early

stages of your cross-examination, Ms. Lea asked you whether

you were relying on the Hydro-Québec interconnection to meet

the 2010 goal, in terms of renewables.

Your answer was that under the revised numbers you

didn't need to. But would you agree with me that as the

IPSP was originally filed, you were relying on the 1,250

megawatts flowing through the Hydro-Québec interconnection

in order to meet the 2010 goal?

MR. SHALABY: Yes.

MR. GOURLAY: So I take it from that, that there is no

issue that renewable imports from Quebec, at least, fit the

2010 requirement of the directive, from your perspective?


MS. NOWINA: Mr. Gourlay, I'm sorry, for the record we


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should have mentioned who your client is. You are

representing?

MR. GOURLAY: Pardon me, Madam Chair. I am

representing Newfoundland and Labrador Hydro.

MS. NOWINA: Thank you.

MR. GOURLAY: As you will appreciate, most of my

questions will be directed towards the issues surrounding

the treatment of imports.

The rationale for treating the Hydro-Québec

interconnection as renewables, is that the predominant

source of power in Quebec is renewable energy. Is that

correct?

MR. SHALABY: Yes.

MR. GOURLAY: Now, if power were to come from another

source, for example, a source in Labrador, and be, for

example, wheeled through Quebec, would there be an issue as

to those imports from that source meeting the requirements?

MR. SHALABY: No, there would not be.

MR. GOURLAY: Thank you.

MR. SHALABY: And that happens today. A large amount

of the electricity on the Hydro-Québec grid comes from

Labrador.

MR. GOURLAY: Thank you. Now, in the plan, it says in

various places that if a long-term import agreement were

entered, that power could substitute renewable energy in the

plan.

MR. SHALABY: Renewable and non-renewable.

MR. GOURLAY: Would it then fit the supply mix


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directive goal for 2025?

MR. SHALABY: If it is a firm purchase and can be

demonstrated to meet the requirements and use in Ontario,

then that's the way it will be interpreted, yes.

MR. GOURLAY: I see. I am perhaps a little confused,

but when you were speaking with Mr. Buonaguro on Thursday,

you stated that imports would not -- would count towards the

2010 goal but not the 2025 goal.

MR. SHALABY: We described the difference in language

in the directive that we interpreted capacity. The word

"capacity" is used to meet the 2010 goal and the words

"energy use in Ontario" is used to describe the 2025 goal.

For that reason we treated the two slightly differently.

MR. GOURLAY: I see. But what you're telling me now is

that if a long-term agreement were entered, there wouldn't

be such an issue. It would be treated as energy used in

Ontario?

MR. SHALABY: Yes.

MR. GOURLAY: So it would fit the 2025 goal. Thank

you. That clarifies things.

Now, in determining which resources would be used to

fit the renewable criteria of the supply mix directive, you

performed an analysis of all of the LUECs of renewable

sources in Ontario?

MR. SHALABY: We went through the evaluation of the

various renewable sources, including conducting a levellized

unit energy cost analysis, but other things, as well.

MR. GOURLAY: But in the LUEC analysis, which is what I


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am interested in, you didn't include imports. I am

wondering why that would be.

MR. SHALABY: We do not know what the levellized costs

of imports will be until we have a better agreement or a

deal with a counterparty. I mean, the levellized unit

energy cost is a cost of a resource. It's not necessarily

the agreed-on price for transferring that resource in

Ontario.

So knowing the cost of developing something in

Newfoundland or in Labrador or in Quebec or in Manitoba is

not sufficient information to indicate how will it be

transferred to Ontario, under what conditions.

MR. PIETREWICZ: This is generally described in Exhibit

D-5-1 on page 13, that precise point.

MR. GOURLAY: Yes, thank you.

So the issue you are describing is summarized in the

plan, I think, as uncertain economics and feasibility. That

phrase is used. Is that the same thing that you are

describing to me now?

MR. SHALABY: And also the reaching of a commercial

agreement. That's another level of consideration when

looking at transactions with other provinces.

MR. GOURLAY: Presumably a commercial agreement would

take care of the other issues, the uncertain economics and

feasibility?

MR. SHALABY: It will narrow that scope, yes. Yes.

MR. GOURLAY: May I ask you to turn up Exhibit B-3-1,

please? I am interested in table 2, page 12.


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MR. SHALABY: I don't go anywhere without it, so I have

it here.

MR. GOURLAY: You probably already have page 12 tabbed.

So this table sets out the six criteria that you used

obviously in developing the plan.

I am interested in components of feasibility, which are

described, I believe, in the description column. Would you

agree with me that those are the components that you used to

determine feasibility? Am I understanding that correctly?

MR. SHALABY: We described in the section some more

texture to this. So section 4.1 at the bottom of this page

described feasibility with more words. That includes more

texture to how we use that criteria. So, yes, that is

indicative. There is more description in the section, and

there is more discussion that we had here over the last week

or so.

MR. GOURLAY: Certainly I appreciate there has been

more discussion, as well, here. I am looking for a summary

that we can use.

Let's start with the table and we will turn to the rest

if we need to.

MR. SHALABY: That's fine.

MR. GOURLAY: When it says in the IPSP that imports are

of insufficiently certain feasibility, which of these

components of feasibility come into play? There is

technical feasibility, commercial availability,

technological maturity, which I assume is not in play --

MR. SHALABY: We described --


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MR. GOURLAY: -- and lead time.

MR. SHALABY: It depends which purchase. We talked

about the Manitoba purchase lacking sufficient

infrastructure at this time to deliver the purchase in the

size that people discussed over the last two or three days

all the way to the load centres.

MR. GOURLAY: Let's talk about an agreement to import

energy from the east, either Quebec or Labrador.

MR. SHALABY: As of 2009 and 2010, then it is the

commercial availability of terms and conditions for the

import that would be the uncertainty at this stage.

MR. GOURLAY: And longer term, I take it commercial

availability would be taken care of by a long-term contract?

MR. SHALABY: If a contract is reached, then that would

be the case, yes.

MR. GOURLAY: Okay. In developing the plan, you stated

that you go through -- you take a resource, as I understand

it, and you go through the six criteria starting with

feasibility. And if a resource doesn't pass the feasibility

test, you don't go on in your analysis?

MR. SHALABY: That's generally true, yes.

MR. GOURLAY: Can you take me through the next steps,

though, in terms of a long-term agreement to import energy

from the east? If an agreement is reached, would you agree

with me that that would be -- that would satisfy the other

five criteria -- excuse me -- yes, the planning criteria on

this table?

MR. SHALABY: If an agreement is reached, we will -- if


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it's reached, then we will ask ourselves, Is it reliable?

Is it flexible? Is it cost-effective for Ontario?

But the conclusion you describe, you describe a journey

that will pass through all of these criteria, yes.

MR. GOURLAY: So the journey, by that you mean the

process, the thought process the OPA would take or some

other body would take in entering such an agreement; is that

what you mean?

MR. SHALABY: Yes.

MR. GOURLAY: Okay. As a resource, as a source of

renewable energy, are there issues with respect to these

other five criteria?

MR. SHALABY: There are issues, yes. I mean, a source

of renewable energy can be reliable or unreliable, depending

on the terms and conditions of the contract. It can be

cost-effective or not cost-effective, depending on the terms

and conditions of a contract.

So the fact that it is a renewable energy source is not

enough to describe whether it is going to be reliable for

Ontario or not, flexible for Ontario or not, cost-effective

for Ontario or not.

There are other considerations that have to complement

the fact that it is renewable to make it meet these other

requirements.

MR. GOURLAY: And in a plan, is that what you describe

when you say the economics are uncertain?

MR. SHALABY: Yes.

MR. GOURLAY: Thank you.


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You will agree with me that there are other components

of the plan that are currently uncertain that aren't subject

to contracts?

MR. SHALABY: We agree that all parts of the plan are

uncertain -- have levels of uncertainty around them, yes.

MR. GOURLAY: In a previous examination, you compared

imports to a single-source procurement, and you said that

there was an additional level of complexity when you are

dealing with imports. Do you recall that?

MR. SHALABY: Maybe provide me a bit more context to

remind me, if you could.

MR. GOURLAY: I am asking you for a bit more context,

but let's --

MR. SHALABY: What is the essence of the question?

MR. GOURLAY: The essence of the question is I am

asking whether imports are of a similar nature to a single-

source procurement, in your view, in terms of uncertainty.

MR. SHALABY: It is a single-source procurement. It's

a different nature than single-source procurement of a

demand reduction contract or a natural gas-fired generating

station. It's a different product.

MR. GOURLAY: How is it different from a procurement

for Ontario-based hydroelectric generation?

MR. SHALABY: The transmission -- the delivery of the

product to Ontario loads, if the hydroelectric station is

developed within Ontario, the transmission is subject to

market rules and regulatory oversight within Ontario.

If the delivery is from outside of Ontario, there is an


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added layer, a set of rules and conditions, as an example,

of a difference between a station located outside of Ontario

and a station located inside of Ontario.

MR. GOURLAY: Is that what you meant when you referred

to an added layer of complexity when you are dealing

with --

MR. SHALABY: That is one dimension, one dimension.

MR. GOURLAY: Are there other dimensions?

MR. SHALABY: There are, yes.

MR. GOURLAY: What are the other dimensions, please?

MR. SHALABY: Dispatchability of the resource may be

different. Long -- the length of the contract or the

continuity of the resource to serve Ontario customers would

be subject to different terms and conditions. Those are a

few --

MR. GOURLAY: Most of those would be presumably dealt

with by way of a contract if it comes to be.

MR. SHALABY: Yes, yes. It can be dealt with. And

your question is whether it is different than a resource

developed in Ontario and it will have a different flavour to

it, a different nature to it.

MR. GOURLAY: One final area of questions. I take it

that imports were not considered for base load in a plan?

They're only being considered for intermediate and peaking

resources; is that right?

MR. SHALABY: We recognize that the value of imports is

higher if it displaces intermediate and peaking resources.

They could be used for base-load resources. Their value is


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higher if they're used for intermediate and peaking

resources.

But they come in different varieties and depending on

the time period they come in and depending on how large or

small they are, they could be base-load replacements. They

could be intermediate and peaking replacement.

So they come in all varieties.

MR. GOURLAY: So you are not ruling out base loads down

the road?

MR. SHALABY: We're not.

MR. GOURLAY: The reason you say it is higher in value,

is that because of the flexibility they lend to the plan?

MR. SHALABY: No. Because the -- the marginal cost of

the resources that are intermediate and peaking is higher

than the marginal costs of the resources that are base load.

So if we had to buy something, let's buy it in a hot

summer day rather than in a cool May night. It has more

value to Ontario in a hot summer day than a cool May night.

MR. GOURLAY: Is that based on the cost assumption,

then? You are assuming that there would be of higher cost

than --

MR. SHALABY: Higher than, talking about the value to

Ontario. It would displace a resource that is higher cost

in Ontario. Or cause us not to build a resource that is

higher cost in Ontario.

MR. GOURLAY: But my question is really why you're

saying that it is higher value. Is that based on an

assumption that they would be higher cost than base-load


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resources?

MR. SHALABY: Yes.

MR. GOURLAY: Okay, thank you. Those are my questions.

MS. NOWINA: Thank you, Mr. Gourlay.

The next I have on my schedule is Ms. Dover from the

Provincial Council of Women. Ms. Dover, maybe we will take

our morning break early so you can start and complete in one

round.

If any of you know the whereabouts of Mr. Keizer of

GLPL, you might alert him that we have missed him. We will

catch up with him later, if he can be here before lunch

break hopefully. Thank you.

MS. NOWINA: We will adjourn until 10:30.

--- Recess taken at 10:16 a.m.

--- Upon resuming at 10:38 a.m.


Ms. Dover, you can go ahead.

CROSS-EXAMINATION BY MS. DOVER:

MS. DOVER: Good morning, Madam Chair, Panel Members.

Mr. Shalaby, I want to begin with two quick notes of

introduction, if you will permit me. One is to remind you

the Provincial Council of Women of Ontario is broader than

merely an environmental group; not to diminish the

significance of those groups, but we certainly consider

ourselves as broadly representing the public, and our

membership includes thousands of Ontarians and we are

organized through associated provincial organizations, as

well as local councils, as a point of introduction.


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The second is by way of introduction to my questions to

you, is that after having the opportunity to receive

guidance from the Board as to the style of questioning, I am

going to attempt to put my cards on the table with you and

ask you to comment on things. I am going to ask you to give

me direction as I go through my questions that if you are

not clear where I am going on a question, it's not my

intention to try and corner you, but merely to put some

issues out there and provide you with an opportunity to

respond.

I am going to ask you some questions about

sustainability, generally, and then about planning criteria.

There is some opportunity in going later in the order of

cross-examination, however I am going to confess to some

serious confusion on our part that I am looking to you for

guidance on as to what the methodology of sustainability

was.

So I am sure you will agree with me that sustainability

is a cornerstone of this review process, and it is important

that we be very clear as to what the methodology was. So I

am going to begin at the beginning, if you will, which is:

What is the proper definition of "sustainability" that

should guide the Board in their review of environmental

sustainability vis-à-vis the plan?

And to this extent, I am going to ask that the screen

display C-10-1, page 9, and of course I am going to

discussion paper 6.

MR. SHALABY: What page in that paper?


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MS. DOVER: Page number 3. It's under the heading 2.1,

"Concept of Sustainability". And if you will permit me to

read into the record as you are going to the reference,

there is very helpful guidance here indicating that:

"Defining sustainability" - and I am reading

here - "...has been challenging because it depends

on values and perspectives of various stakeholders

that are subject to change over time. As noted in

one of the more current and comprehensive works on

the subject, many variations of sustainability

have been applied in practical initiatives while

researchers have spent years pursuing a robust

definition. The results have been both diverse

and at time conflicting."

The paper goes on at the last paragraph to site a

definition. So I think the paper is wise, beginning a

discussion of sustainability, by saying this is hard from

the start, in terms of defining what the ultimate goal is of

sustainability.

The paper then provides some history around the

definition of sustainability, citing the 1987 definition in

the last paragraph and turning the page over to page 4,

citing the Earth Summit definition, which reads:

"In order to achieve sustainable development,

environmental protection shall constitute an

integral part of the development process and

cannot be considered in isolation from it."

Now, Mr. Shalaby, I don't mean to take you to where


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many other questioners have gone, in terms of asking you to

elucidate how the planning criteria operates. I mean to ask

you a predicate question. What is the definition of

sustainability that the OPA intends this Board to be working

with?

MR. SHALABY: Well, just having finished saying it is a

hard concept and a -- it requires attention to multiple

aspects of development, of planning, and we distil these

requirements in the evidence that follows this and is in

section B-3-1.

So rather than defining it in quotes-unquotes and --

there is lots of definitions. Rather than do that, we said,

What do you have to do to be moving towards sustainability?

So we went into -- from seeking a definition to seeking

how would you apply some of the principles. What do you

need to consider so that your planning is moving towards

sustainability? And that's what we locked onto, and those

are the requirements that we explained in our evidence.

MR. VEGH: Madam Chair, not to interrupt, but just for

clarification, the Board has provided a definition of what

it means by sustainability, and so the important decider

here is the Board. And the Board indicated, in the filing

guidelines at Exhibit A-3-1, page 29, that it defines

environmental sustainability as follows:

"Environmental sustainability refers to

development that ensures that the needs of the

present are met without comprising the ability of

future generations to meet their own needs."


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MS. DOVER: Well, with respect, Mr. Vegh, I am not

asking Mr. Shalaby to give a legal definition as to what the

definition of sustainability is that the Board should

advance in its ultimate decision. I am asking Mr. Shalaby

to elucidate what definition of environmental sustainability

the OPA used in developing the plan, which I think speaks

more to what the ultimate test is that the Board will apply

in regards to whether or not the OPA sufficiently weighed

and evaluated sustainability.

I am not entering an argument here as to what the

proper legal definition of sustainability is. I am asking

Mr. Shalaby to elucidate the thinking of the OPA around the

definition.

So perhaps with Mr. Vegh's helpful direction, I will

redirect a more specific question to Mr. Shalaby.

Is the Board's definition of sustainability, which is a

restatement of the 1987 Brundtland definition of

sustainability, is that -- is that also the OPA definition

of sustainability, in terms of capturing the ultimate goal

as implemented through the six planning criteria?

Is the Board's definition of sustainability the OPA's

definition of sustainability in terms of helping the Board

understand what guided your overall approach to

sustainability?

MR. SHALABY: What I am indicating is the definition

can only take you a certain distance. We were seeking

practical guidance on how to develop an integrated plan. So

we were seeking translation of a definition with something


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that we can work with in developing an integrated plan.

So definitions that have stood the test of time are the

Brundtland definition that was adopted by the Board.

They're interpreted in requirements that are stated, and

interpreted further in the criteria that we developed.

So it's a way of making the definition operational,

making the definition meaningful to the planning exercise.

That's what we attempted to do.

MS. DOVER: Thank you for that. I just want to make

sure that I understand what the methodology is. If I am

understanding correctly, the methodology for sustainability,

the overall investment of the OPA methodologically, if I can

put it that way, was not in an ultimate definition, but in a

process represented by the six criteria. Do I understand

that correctly?

MR. SHALABY: That is a good description, yes.

MS. DOVER: Okay. So I want to then go back to page 3,

if I could just ask for the screen to be scrolled back once,

and I am going just to the paragraph after that that I cited

that begins, "Many interpretations". And it signals here:

"Many interpretations will always exist, but

almost all involve the simultaneous consideration

of economic, social and environmental

imperatives."

Now, I want to refer, then, to the -- Mr. Crocker was

kind enough to ask you some questions in regards to the

implementation of the six criteria, and I think most

questioners have gone through how sustainability is


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reflected in each one of the criteria. And I must admit I

have some temptation to go there later on in my questioning,

but at this point I want to ask you: If it is true that

almost all involve the simultaneous consideration of these

imperatives, how does that normative approach to

sustainability square with the filtered application of the

six planning criteria?

If it is usually done as a harmonized analysis, how,

then, does that -- I mean, what comments could you provide,

what insight could you provide to the Board about how that's

the way it is normatively done versus your approach that, in

effect, priorized (sic) the first three planning criteria,

and then implemented the three following?

MR. SHALABY: The reference here is that environmental,

social and economic considerations be considered together.

That's one thought. Considered these three together, not

separately.

The criteria that we apply in developing the plan and

evaluating the plan and describing the plan are considered

together. I said that several times. We are not attempting

to consider one criterion in exclusion to the -–they are

considered together.

Whether you go through them sequentially or not, that

doesn't mean they're not considered together. They're all

considered, and we met them all in developing the plan that

we present here today.

MS. DOVER: Okay. In the interests of time I'm not

going to direct you to the pinpoint, but for reference in


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the transcript, I am referring to cross-examination that

happened on September 9th in response to Mr. Crocker's

question at page 46, line 14, where clearly there was a

filtered approach, where, for example, of the six planning

criteria we don't have six equal citizens here. We have

three priorized criteria, which are, in effect, threshold

criteria that are applied, for example, prior to cost

environmental protection and societal acceptance.

Now, I don't mean to be quite as argumentative as the

tone of my questioning is taking, because what I mean to ask

you is to take a moment to reflect in terms of

sustainability methodology, that if it's normally done, a

simultaneous consideration, your process, in terms of the

methodology, is priorizing the three first planning criteria

after -- or prior to.

So the risk is that the sustainability analysis is

disaggregated. And I am asking you to reflect upon that

priorization process as potentially compromising a potential

sustainability outcome.

MR. SHALABY: I am trying to think where the

compromises might be and I am trying to think how we can

truly simultaneously, as in the same instant in time, do all

six. I mean this only happens in karate movies and things.

I mean I don't know how can you do that. You go

sequentially through things. You iterate. There are

iterations. Simultaneous consideration means considered

together but not necessarily at the same stage, the same

time.


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We talked about iterations. We talked about going

through a process and coming back and checking over -- for

example, reliability is done in a way that – iteratively.

Will this transmission line mean this area of the province

is reliably supplied? If not, we go back and do something

else and we keep it rating until it is reliably supplied.

So, simultaneous doesn't mean -- it means by the time

you are done, you have considered all of the considerations

by the time you come out of it.

MS. DOVER: Okay. I believe, if I pursue any further,

that I am really being redundant to the other questions.

Just by way of summary of this issue, here's my concern: I

will meet you on the karate metaphor and raise you a

chocolate cake metaphor. Is that if I am baking a chocolate

cake, and I separate the chocolate from the flour and eggs,

and then I cook up the eggs, I've got an omelette not a

chocolate cake.

So the concern is, if the six criteria are intended to

be your sustainability methodology, but you stop potentially

after an analysis of the first threshold criteria, don't you

have a sustainability process which is an omelette and not a

chocolate cake?

MR. SHALABY: Well, we're even now on the...

[Laughter]

MS. DOVER: I'm not sure if we're even or if I win, Mr.

Shalaby.

MR. SHALABY: I am anxious to go with the third one.

MS. NOWINA: I can't wait for the next one.


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MS. DOVER: So Mr. Shalaby, part of my interest, in

terms of -- I mean obviously, our hearts and minds in the

PCW are within what the ultimate outcome of the

sustainability analysis is, but the Board has give us some

indication in their issues decision that what we're looking

for in the sustainability analysis, the Board describes as

the test. And the test I am citing from the decision says,

the test is not whether the IPSP is environmentally

sustainable, but whether the OPA considered environmental

sustainability.

So insofar as I am trying to be clear as to what the

methodology for sustainability is, I think that's key. And

part of my concern around the criteria, a potentially lack

of symphony amongst the criteria relates to the prefiled

evidence at A-2-2, page 18.

So this is the document titled: "Relationship of the

OPA Planning Criteria and the OEB Review Criteria." So we

signalled now, we've covered in cross-examination, we don't

have a clear definition of sustainability, but the

sustainability methodology is housed within six criteria.

What is the implication for the Board's review of those

six criteria? Because there's some suggestion here, in A-2-

2, that the Board's job, in the opinion of the OPA, is not

to evaluate whether or not there is a symphonic result, in

terms of sustainability of the six criteria, but there is

actually different standards of review associated with each

one of the six criteria.

I am going to acknowledge that the OPA did not have the


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benefit of the Board's decision on issues while making this

document. So I am going to ask you now, with hindsight,

having the benefit of the Board's direction in terms of the

test for sustainability, and I am going to ask you to

reflect then upon table 3, which clearly lays out that there

is a different legal standard of deference associated with

different components of the planning criteria.

MR. VEGH: If I can address this, Madam Chair, because

I think we are getting into -- we discussed A-2-2, but there

is a specific legal underpinning to the question, and I

think it goes to stepping back a bit and looking at the

Board's mandate, because this is what this document relates

to.

In particular, what this relates to is the Board's

mandate is to determine compliance with the directives and

economic prudence and cost-effectiveness.

The question of sustainability comes up in the issue of

compliance with the directives and the question there for

the Board is, in a sense, the compliance question on

sustainability. Did the OPA consider sustainability?

And the OPA's evidence, with respect to its

consideration of sustainability, is described here and the

evidence is given specifically elsewhere.

With respect to the planning criteria specifically, the

evidence is that the planning criteria took sustainability

into account.

So the issue for the Board is whether or not -- whether

or not that was adequate. Does that demonstrate adequate


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consideration of sustainability?

I think the question of whether or not the plan is,

itself, sustainable, which is a separate question, which I

think counsel is really addressing, is an issue that the

Board said in the issues decision it will not be addressing.

The criteria for the Board is whether the plan is

economically prudent and cost-effective and that may well be

different than the requirement, the criteria of

sustainability.

What this paper tries to do is link up the two a bit,

the planning criteria, the OPA's planning criteria and the

Board's review criteria, but the two are still different.

The Board's criteria for reviewing sustainability is

with respect to whether the OPA considered it. You have the

evidence on how the OPA considered it and you will determine

whether that is adequate.

The next question, then, is, having done that, the next

question is: Is the plan economically prudent and cost-

effective?

And that, of course, contained its own terms that have

to be defined. I think the Board has defined what it means

by economically prudent. It is largely caught up within the

idea of flexibility. That's pretty clear in the decision.

And the Board -- that's clear in the decision and in the

guidelines. And the Board has given its indication of what

cost-effectiveness means, which is overall lowest cost on a

per-unit basis. And that's made clear in the guidelines, as

well.


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So all of this is to say that the way in which these

concepts are brought into the Board's review are A, largely

a matter of legal interpretation. I think many of these

legal rulings or findings have already been made. Well, I

will leave it at A, then. That's what I wanted to say in

respect of this point.

So I think counsel has made a good point. I am not

saying the witness can't respond to it, but there is a

context that I thought would be helpful to set out.

MS. NOWINA: I will respond to you, Mr. Vegh, so we're

very clear. I agree with you completely in that the issues

decision says that and the issues list says the same, that

our jurisdiction is to determine whether or not the OPA

considered sustainability, not to determine whether or not

the plan is sustainable. So that is clearly the issue

before us.

I did not believe that Ms. Dover's questions were

straying from that. I didn't have any indication of that.

And I think it is very important for us to understand

how -- the OPA's criteria and how they applied them in order

for us to make that judgment.

Ms. Dover.

MS. DOVER: So I apologize if some of my questions are

simply self-indulgent attempts to seek some clarity on my

own part, but so that I am -- I want to make sure that I

understand, Mr. Shalaby, what the methodology of

sustainability is that you are asking the Board to give

direction, potentially approve of.


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So what we have covered so far is that it is not driven

by definition. It includes six criteria. What I am asking

now is: Do you expect the Board to be evaluating those

criteria equally, identically, in a similar way, or do you

expect the Board to place more or less emphasis on some of

the criteria than others?

MR. SHALABY: I think what we're describing here is a

product, a plan that is a product of using these criteria,

and the criteria is the product of considering

sustainability and considering integration.

The Board is examining the plan for cost-effectiveness

and for economic prudence. So whether the Board is

examining criteria or examining the product that the

criteria resulted in, I suspect the Board is examining the

plan and whether it is economically prudent and cost-

effective.

MS. DOVER: Okay, Mr. Shalaby, I think we have probably

canvassed that area thoroughly, so I am going to move

forward to ask you some questions on specific planning

criteria.

When I go to ask the questions about the specific

criteria, my intention is to be providing greater insight

and greater clarity on the overall methodology of

sustainability.

So if I could ask for slide 9 from K1.1, please, to be

illuminated?

Just by way of introduction, are the planning criteria

-- are the planning criteria the sustainability process or


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the planning process with sustainability components?

MR. SHALABY: The planning criteria are the context-

specific guidance that planners use to develop plans and

evaluate plans.

MS. DOVER: So did you have another process that you

called planning and this was your sustainability analysis,

but there was a different process called planning?

MR. SHALABY: There was no different process than we

described here.

MS. DOVER: So your planning process and your

sustainability process were the same one?

MR. SHALABY: Sustainability was considered in

planning.

MS. DOVER: Okay. So your planning process has

sustainability components, then?

MR. SHALABY: We described that in Exhibit B-1-1. That

and integration were the two -- the two considerations in

developing the plan. How to integrate the options over time

and over geography, and how to consider sustainability in

developing the plan, those two things develop the plan.

MS. DOVER: Here is my confusion, though. What is the

sustainability methodology that you are asking the Board to

give you guidance on, because what I hear is that your

planning process was your sustainability process?

So, for example, Mr. Shalaby, at the fear of one-upping

my chocolate cake analogy, if I balance my chequebook at

home, can I call that a sustainability process? We have

problems if there is -- if the same process for planning


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quacks and waddles like your sustainability process, because

then how does the Board look to anything definable,

distinguishable to say, That was the sustainability

methodology, that was what was considered and we're going to

approve or give direction of that? Otherwise, they're just

looking at your planning process.

MR. SHALABY: I will define what we meant by the

planning process. I will take my take on some of the issues

that you raise.

The planning process is defined on the first page of

Exhibit B-3-1, and we talk about the stages in the planning

process, defining and developing the goals, developing the

plan, reviewing the plan. And the fourth part of that is

implementation by multiple parties.

We talked about that. That is the planning process.

It starts by defining goals, developing a plan to achieve

these goals, reviewing the plan to see whether it complies

with the directives and whether it is economically prudent

and cost-effective. That is the planning process that we

talked about.

MS. DOVER: Okay, I am going to --

MR. SHALABY: Now, when we go to plan development, we

say that we relied on sustainability thinking and we relied

on integration as the two drivers or two ingredients that

came together to develop the plan, which is the middle part

of the planning process, the middle part meaning between

defining goals and between review.

So that's how I place sustainability requirements and


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how they were considered in the planning process. It's in

the middle part, and it's one of two things that we

considered. The other one was integration.

MS. DOVER: So I think -- and I apologize. I am going

to come back to my question that is on the screen right now,

but I am actually -- just to follow up on Mr. Shalaby's

response, I think my concern was highlighted in the response

to some questions that Mr. Crocker had in regards to the

applicability of sustainability in the context of

reliability.

I am referring now to the transcript of September 9th,

and I am going to take you there. My apologies. This is at

page 37, line 15. So this was the question that Mr. Crocker

had about how sustainability is applied in the context of

reliability, and I would suggest that another way of putting

that question is: What is the distinction between

sustainability and reliability that you considered, not in

terms of what is the sustainable outcome, but of just trying

to trace what the sustainability methodology was here?

The response to Mr. Crocker's question was, and I will

read into the record:

"Sustainability requires that people have access

to what they need to do to live well and to live a

productive, safe and healthy life, and electricity

certainly does that and provides reliability

electricity everywhere in Ontario for every time

period between now and 2025. It certainly

contributes to that requirement."


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So I can't -- here are my cards on the table I am going

to ask you to comment on. I can't tell the difference

between electricity is good and a sustainability process,

because it seems like what is reliable is sustainable. That

seems to be the OPA application of the reliability process

in the context of sustainability.

So that's my concern. I am going to ask you -- invite

you to comment on it.

MR. SHALABY: The quote that you read in the record

indicates that a reliable system contributes to livelihood

and sufficiency, contributes to sustainability. It's not

the entire story. It is not the only thing to consider, but

reliability contributes to sustainable requirements --

sustainability requirements in Ontario in the context of

electricity, in the context of the 20 years to come.

So it's not the only -- it is not synonymous with

sustainability. It is not a sustainability process, but it

contributes to livelihood and sufficiency. That was the

point that we are trying to link from sustainability

requirement to the criteria that we use.

The context came later, in discussions last week,

reliability is as olds as the hills. It is the criterion

used for the last 30 years, 40 years, more. What is new

about that? We said there is nothing new about that, but it

does link to the concept of sustainability, in that it meets

a substantial requirement for providing people with

livelihood and opportunity for economic growth and for

comfort and safety.


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MS. DOVER: That is helpful, Mr. Shalaby, and I will

just -- obviously I am going to have a template concern.

If I come back to the issue of methodology, of giving

the Board some clear territorial lines around what the

sustainability methodology was, but I am going to now go

back to slide 9 -- and my apologies for going down the

garden path there a little bit.

In the context of feasibility, under the first bullet

point there is a dash line: Timing. And in the context of

your explanation around timing, you meant clearly timing

means timing for approval.

You have indicated as well in cross-examination that

the time to construction for nuclear facilities is

approximately ten years. I am going to ask you to give

further -- we have in evidence, we have in cross-examination

some general identification of other authorities that are

involved in the approval process for building new generation

for nuclear. But what I am asking you for is greater

specifics. Because in the context of feasibility, we need

to ask the question: Can new nuclear generation get

approved within the time that we have designated for

construction?

So I am going to ask you just an open-ended question.

Of the ten years, how much of that is for approvals? And

secondly, will the OPA undertake to provide whatever

assumptions it is using for the regulatory roadmap that must

be traversed in having new generation brought online?

MR. SHALABY: The details are numerous, but roughly


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speaking, there are four years for approvals prior to

beginning of construction, six years for construction, in

that ten-year time period assumption. Roughly speaking,

that's the planning assumption at this stage.

As to the detailed road map, that is multiple

approvals. I mean, this is not a single approval. We

approve safety reports, environmental assessments, zoning

and municipal approvals. There is a large number of

approvals that are undertaken and they're underway today by

both Bruce Power and Ontario Power Generation for licensing

and for permitting of either refurbishment or new build at

the sites that they're applying for.

So these processes are underway. They're started.

They started a year ago and -- for both the Bruce site and

the Darlington site.

MS. DOVER: I am sure -- you know I'm going to resist

any reference to history, but I am sure you will understand

my concern, in terms of the regulatory process being a

potential barrier for implementation. Because while I am

sure you were involved in trying to design what the

regulatory road map will be in terms of your strategies,

everybody else in the room is also involved in trying to

design what their various strategies are. So in the

interests of transparency and in the interest of determining

whether or not the OPA adequately considered a proper time

frame for a regulatory road map, will you make an

undertaking to provide the Board with what your assumption

was for the regulatory road map for new generation?


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MR. SHALABY: Give us a second to see whether we have

it in evidence or not. If we don't -- the last thing the

world needs is another set of regulatory roadmaps but if we

need one, we will provide one.


MR. SHALABY: We can certainly undertake to provide you

with the assumptions we made, in terms of -- I am reluctant

to accept road map without further elaboration.

Our interest is: How long would it take to have

nuclear on line by 2018 or 2017 or 2020 – 2029? Our

interest is the length of time it takes between now and the

first nuclear power on line for new build or refurbishment.

We can give you the assumptions, but the complexity of

approvals is something we acknowledge, and something that we

say that proponents go through and we can enumerate some the

approvals but not all of them, and not describe it in detail

that we're not familiar with.

So we can give you the assumptions we made. Why we

think four years is the time it might take. Why 2018 is a

reasonable assumption for first power, if that is what

you're looking for.

MS. DOVER: That is what I am looking for and that

would be helpful, Mr. Shalaby.

MR. SHALABY: It would come from some of the

discussions we made in 2006, 2007. We can undertake to do

that.

MS. DOVER: Thank you.

MR. RICHMOND: That would be Undertaking J6.1, and it


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would be the assumptions utilized by the OPA to meet the in-

service date for is it new build --

MR. SHALABY: New build for 2018.

MR. RICHMOND: To meet the new build in-service date of

2018.

UNDERTAKING NO. J6.1: TO PROVIDE THE ASSUMPTIONS

UTILIZED BY THE OPA TO MEET THE NEW BUILD IN-SERVICE

DATE OF 2018

MS. DOVER: My question really is an opportune

introduction, by way of my question, in regards to

flexibility.

What is the plan if the federal environmental

assessments are not approved?

MR. SHALABY: We will consider that as we know that the

federal environmental assessment not approved, meaning a

specific site is not approved? Or meaning what is not

approved?

MS. DOVER: The two environmental assessments, the OPG

and Bruce environmental assessments, that are underway now.

MR. SHALABY: Yes.

MS. DOVER: Have you made a presumption that those

environmental assessments will be approved? It is underway.

MR. SHALABY: Yes.

MS. DOVER: What if they don't meet the criteria

required by CEAA; what's the plan?

MR. SHALABY: One of several things can happen at that

stage. One is typically the proponent would seek direction,

what will make them acceptable: accommodation, changes in


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plans to make them acceptable, or move on to another site if

the site is not acceptable or moving on to another

technology if this technology is not acceptable.

So depending on the reasons why it is not acceptable,

we will deal with that when we get to know what those

reasons are.

MS. DOVER: Okay. So I want, then, to ask you a couple

of questions about costs. My point of departure here is the

Board's decision at page 38, where the Board has given

specific direction, if I am not mistaken, in response to the

PCWO's submission on issues, the Board indicates that it

finds a review of the OPA's consideration of sustainability

could include a review of the OPA's consideration of

environmental costs and intragenerational and

intragenerational equity.

Sorry, are you there, Mr. Shalaby?

My question here is just one by way of evidence.

MR. SHALABY: Yes.

MS. DOVER: Of the material that the OPA has filed with

the Board, what of that material contains information about

environmental costs?

MR. SHALABY: Our approach has been to quantify

emissions, land use, water use, the six indicators that we

talked about, but not to translate that into dollar signs.

MS. DOVER: No. So, again, being totally obtuse, to

clearly distinguish what the Board is to look at, the OPA's

consideration of environmental costs is contained in the

environmental indicator analysis under environmental


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protection planning criteria. Is that correct? No?

MR. SHALABY: Well, if cost is a dollar sign, then it's

not that.

MS. DOVER: Okay. Well, then help me out here, Mr.

Shalaby, because the OPA's interested in the consideration

of environmental cost, so -- whether or not you consider it

an environmental cost.

So help us out here, what do you consider an

environmental cost?

MR. SHALABY: We define environmental emissions and we

say that these emissions are precursors to impacts. Air

emissions are precursors to smog or to acid rain or to CO2

that -- greenhouse impacts and so on.

So the emissions have impacts. We did not go to the

impacts, because that is project-specific and that will be

determined in the project stage. That's the reason we did

not go to specific impacts of the emissions. So we stopped

at describing the emissions under different scenarios, the

different kinds of emissions over time under different

scenarios.

Those translate to impacts, and the impacts result in

costs to either property or people or the ecosystem.

MS. DOVER: I am just going to lob you a question,

because the Board has signalled that the review could

include the OPA's consideration of environmental costs. Did

you consider environmental costs?

MR. SHALABY: Not in dollar signs, and we gave the

reasons why we didn't do that.


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MS. DOVER: Okay.

MR. SHALABY: We gave the ingredients, the basic

quantities that we can be certain of describing. We

described methodologies to go further, but did not do that,

and we indicate that when it is projects specific, it is

more meaningful to do that on a project-specific basis.

MS. DOVER: So you have indicated -- let's presume, for

the sake of argument, that whatever it is that you

considered in the context of indicators - and by "whatever",

I mean however it is that you categorize that - that

environmental indicator process I would like to look into

further, because you were asked some questions by counsel

for VECC on this on September 11th. This is volume 4 at

page 155.

Because if I am understanding you correctly, Mr.

Shalaby, you don't want to be put in a box of having said

that environmental costs should be quantified monetary

comparisons. So the OPA didn't do that, but there is

something in the environmental indicator process that the

OPA did do.

So I think we need to spend some time with that to

figure out what you considered, both in terms of costs, but

then also because the indicator -- if I understand

correctly, the indicators are one of two components of the

environmental protection criteria, so at line 27, where you

were asked about what material changes were made to the plan

as a result of the application of environmental performance

and societal acceptance. And your response, which I am


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reading into the record -- and I am really going back to

this, Mr. Shalaby, so you can provide us with greater

clarity, because you signalled here:

"We are in a narrow band, narrow corridor, where

weighing and trading off will not be material

different in what we choose. So for that

reason..."

And here is the significant part:

"...we chose just to present the information and

not to go through a lot of trading off and a lot

of weighing at this stage."

So did you just collect the information, or was it in

any way considered, metabolized, integrated? Was it an

information-gathering process, or did something happen to

the information?

MR. SHALABY: It was both a -- it's not just a

gathering process, as we described. It was information --

emission rates is an information-gathering process. We

combined that with the energy output of the plan and we

produced the emission tracking that we do. So it is not

just information gathering.

There is an added element of taking these emission

factors, together with the generation amounts in each year

of the plan, to generate the six indicator quantities.

So that's what we have done. We collected information,

applied it to the performance of the plan to generate, to

track the six indicators.

MS. DOVER: Okay. Then I would like to take you --


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MR. SHALABY: And we go further into describing that

environmental regulations on the environmental protection

side is going to be enforced and overseen by a large number

of entities. We mention some of them in the evidence, and

there are many more than that.

We also say that project approvals will go through

specific environmental assessments that will talk about

specific project impacts.

So we say a different thing. We say several things.

One is we provide information that is relevant and helpful

and useful to be considered at the plan level. We say we

know that each project will be considered separately in

further detail when its location, when its technology, when

its method of construction, when its methods of operation

are more well defined and specific. That is a more

appropriate stage to consider the impacts further.

And we say there is a significant body of governance,

both in laws and in administrative law, to oversee the

environmental protection and safety considerations

associated with these facilities.

MS. DOVER: I understand that, Mr. Shalaby, and you

have given the same explanation to previous cross-examiners,

but I just want to --

MR. SHALABY: That is not simply collecting

information. That is a lot more than that.

MS. DOVER: I just want to be clear here, because you

told counsel for the VECC, and it is in the transcript here,

that you did not weigh the information.


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MR. SHALABY: Yes. We did not.

MS. DOVER: Okay.

MR. SHALABY: We did that in the previous stage of

planning. The context for the quote that you just put on

the record is whether an acre of land is worth twice or

three times 2 tonnes of water or 17,000 gallons of water, or

not, or whether radioactivity is more harmful than CO2 or

SO2. We did that in the supply mix evaluation, because we

were looking at vastly different scenarios, vastly different

mixes.

The reference to a narrow corridor here is that we are

developing a plan that will respond and result in a narrow

range of the tract emissions that we are talking about. For

that reason, the trading off and the weighing was not going

to result in meaningful differences. That's the context

we're talking about, not adding weights or trading off at

that stage.

MS. DOVER: And I guess the thing is -- and I ask this

question completely openheartedly, because the issue is if

the environmental indicators speak to the issue of

environmental costs, which is what this Board wants to hear,

we need to know how those environmental indicators were

weighed.

And I understand, Mr. Shalaby, you have been generous

at explaining that the ultimate assessment that came out of

those medium-based analyses did not result in any kind of

comparison between the plans, but what we need to know, in

order to determine whether or not you considered


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environmental costs, was how you weighed the information as

a result of -- that came out of the environmental indicator

process, because, as I understand it, that's what you are

suggesting to the Board is your environmental cost analysis

is what you did with the indicators.

So I am inviting you to share with the Board how you

weighed that information.

MR. VEGH: Madam Chair, I think my friend is becoming

argumentative, not in an adversarial way, but -- with a good

tone and a good intention, but I think the question has been

asked and answered, and we have now hit the stage of a bit

of a debate, and I am not sure if there is that much value

in repeating the question and answer.

MS. NOWINA: Mr. Vegh, I am interested in Mr. Shalaby

giving it one more try, based on that last question, and

then we will leave it at that, Ms. Dover.

MR. SHALABY: My turn?

MS. NOWINA: Your turn.

MR. SHALABY: The way of evaluating and weighing is

that we looked at the environmental results, the six tracked

emissions that are displayed from year to year to year over

the planning period.

We observed several things. One is many of them are

declining over time, and we said this is good, CO2 NOx, SO2.

Mercury is being eliminated completely. That is a good

result. So that is evaluation. We indicated that

contaminants that reduce over time is a good thing.

Contaminants that do not increase over time is not a


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good thing nor a bad thing. They stay roughly stable. And

that's water use and radiation and nuclear fuel quantities.

We observed that land use is going up because of

renewables and because of transmission, and that is an

observation. The plan uses more land over the years, and it

is a feature of using renewables and using transmission to

harvest these renewables. So we did more than just display

the parameters.

We took into consideration that these amounts are well

within regulatory limits. For example, the radiation dose

is a small percentage of the allowable dose by regulation,

as an example.

The CO2 emissions are well within government targets

for reduction of CO2 emissions the Ontario government

targets, so some are federal limits, some are Ontario policy

targets.

We observed that the plan will result in meeting

targets and are well within regulatory and health targets

specified by authorities.

MS. DOVER: Well, Mr. Shalaby, I have some questions in

regards to the issue around environmental compliance which I

will reserve for -- yes, I had anticipated the nudge, and I

really just have two more questions. It was the metaphors

that took all of the time. It is incumbent upon me to at

least ask you a question in regards to waste. I am going to

ask for slide 111 be put up from K1.1. This really builds

upon the answer you have just given in regard to the

increased environmental burdens that will be caused by


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renewables in comparison to the environmentally benign

aspects of nuclear generation.

So this is -- I am asking you specifically -- my

question is going to be to ask you to explain the lateral

arrow under "follow nuclear production." And as you do

that, I want you to do that in relation to a specific

imaginary question.

Fifty years down the road, Mr. Shalaby, imagine, if you

will, a wind farm that we have established and is

operational today and what that land looks like 50 years

down the road. And then to imagine what a nuclear facility

looks like 50 years down the road, and what that land looks

like.

And in light of that contrast, why is it that there is

an increased environmental burden associated with renewables

and a neutral environmental burden associated with nuclear

power?

MR. SHALABY: The arrows are simply indicating the

quantitative nature over time.

We spent time discussing that we did not talk about

burden. Impacts are separate from the indicators that we're

tracking. I am just simply saying there is more acreage,

that this plan will result in using more acreage and will

result in the same amount of sievert year dose over time,

tracking the nuclear generation roughly.

There is no burden implied or explicit in any of this.

It just is simply a description. The detailed year-by-year

evidence is in G-3-1. The specified quantities are


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determined under different scenarios and under different

years. So the details are numerous and they are behind

this, if we chose one slide to describe the environmental

factors and how they track over time, this is a simplified

way of doing that or a summary way of doing that.

MS. DOVER: Okay. Then I will return with some other

questions in regards to the environmental panel.

I guess I will just sort of close in regards to a

couple of quick questions in regards to societal acceptance.

And in closing I am going to refer, once again, to the

cross-examination by VECC which was very helpful in terms of

laying out some foundational concerns.

At page 56, line 4 -- 24, I apologize. This was a

question from counsel asking for greater elucidation in the

meaning of the societal acceptance criterion and the answer

enumerated a number of presumably components of societal

acceptance, but included projects, implementation,

governance in Ontario, environmental protection. So it

seemed to me that it was really broad, encompassing list of

every possible governance process associated with social

acceptance.

I guess at this point I am just going to ask you a very

targeted question which is: How socially acceptable will it

be to future generations to have the legacy of nuclear

power? How is nuclear power considered in the context of

intergenerational equity as a demonstration -- I am not

asking you in terms of the outcome here -- but as a

demonstration of how sustainability was considered in the


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criterion of social acceptance or societal acceptance?

MR. SHALABY: You talked about intergeneration effects

of nuclear power?

MS. DOVER: Yes. I am not asking what are the

intergenerational effects. I am asking: How was it

considered in the context of societal acceptance, especially

given that the explanation of societal acceptance, the

components of societal acceptance, are all governance

processes?

MR. SHALABY: I will try to answer directionally, and

if I am not addressing your question, you will let me know.

We spoke about the intergenerational impacts of nuclear

being the used fuel and the decommissioning. Those are the

things that are going to last for many, many years.

We observed and we reported on the cost of these

activities being collected by today's generation. We are

not leaving the cost of nuclear waste management or

decommissioning to future generations. These are being

collected by current generations, current users of

electricity.

That's one way of assuring the equity that we are not

leaving a legacy to be looked after by future generations.

We are collecting the money to do that today. That's one

example.

The other example is, the costs of nuclear power is,

when we considered the costs and techniques, it gives

similar weight or sufficient weight to future costs and to

current costs. We are not shifting costs. We are not


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considering future costs to be heavily discounted. We

didn't heavily discount future costs. The social discount

rate and the levellizing techniques, both of those together

give sufficient weight than other techniques, more weight to

future costs than other techniques in costs. That's another

indication, one other way we dealt with nuclear specifically

as an option.

The third, of course, is nuclear is replacing something

else that could be emitting CO2. CO2 is a legacy that is

left for many, many years and is unmitigated, in terms of

costs to compensation for it or technology to compensate for

it.

So here are three observations about nuclear and

intergenerations.

MS. DOVER: I have one last question, which is really a

concern that I will leave with you and invite you to take

the last word.

So Ms. Lea asked you, on the first question, or on the

first day, how is it that a plan, that has significant --

the lion's share portion of it being nuclear generation, how

is that flexible?

You were, to your credit, candid with her where you

said: It's not flexible, but it has other benefits.

So when we talk about nuclear waste, in this context on

this panel, I think we need to take pause, because the

analysis around nuclear waste, while obviously we disagree

with it on other substantive grounds -- represents the

combination of key processes.


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Your analysis around nuclear waste is a result of your

analysis on the environmental indicators that has --

MS. NOWINA: Ms. Dover, you will get a chance to give

argument later.

MS. DOVER: Yes.

MS. NOWINA: If you have a question?

MS. DOVER: I do, I do. I will make it more concise.

My concern is that you have just indicated that nuclear

waste will endure over time. So I mean to suggest that I

have concerns around the result of the environmental

indicator analysis, around waste. It suggests a faulty

process around waste and the last thing -- that's my first

-- asking you to comment that: Are the results around

nuclear waste suggestive of a faulty process of the

indicator analysis? But more broadly than that, were where

you told Ms. Lea that nuclear power is not flexible, somehow

the sustainability analysis around nuclear waste did not

result in the same candour. That says that there is no

intergenerational equity around nuclear waste. It instead

resulted in a neutral treatment of that. So I am going to

ask you to reflect on how nuclear waste suggests defects in

the indicator analysis and, more broadly, on your

sustainability methodology.

MR. SHALABY: This is the last question?

MS. DOVER: I swear. I'm done. I don't even have a

remaining metaphor.

MS. NOWINA: It's the last question.

[Laughter]


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MR. SHALABY: A number of things to do with nuclear

waste. It is not just indicators we are giving. It is

observation that the money is being collected. It is

indication that there is something called the Nuclear Waste

Management Organization that has been in place for several

years that is developing waste management options and

proposals. The first stage of approval has been granted by

the federal government.

This is progress. There is action. There is progress.

There is money in the bank to look after nuclear waste. So

it is not just indicating that there is nuclear waste.

We are quantifying the nuclear waste quantities. We

are adding the information about the management of that

waste, the money needed to manage that waste. We are not

denying there is an impact in the future. These things

would last for many, many years. There is no denial of

that.

But when the money is available for it, and the concept

is developed to manage it, and there is an organization in

place to look after it, that gave us an indication that this

issue is being managed and is being managed responsibly.

That's in addition to just indications.

And you made observations about the flexibility of

nuclear. We talked about it at length over the last several

days, as well, and nothing more to add in that regard.

So, thank you.

MS. DOVER: Thank you.

MS. NOWINA: Thank you, Ms. Dover. Mr. Murphy for


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CanSIA.

CROSS-EXAMINATION BY MR. MURPHY:

MR. MURPHY: Hello. Hello, Mr. Shalaby. How are you?

I am behind -- Mr. Vegh is protecting you there, although

from what I have seen so far, you don't need too much

protection.

Can you see me and hear me all right?

MR. SHALABY: I can. If you speak into the microphone,

that will be even better.

MR. MURPHY: Anybody else? Everybody all right?

MS. NOWINA: No, Mr. Murphy, you can't be heard. Maybe

just speak a little bit more into the microphone.

MR. MURPHY: If I lean forward, is that any better?

MS. NOWINA: Is that better?

MR. MURPHY: I will do that, then.

MS. NOWINA: Still getting -- is your microphone on

now?

MR. MURPHY: The green light is on.

MS. NOWINA: All right.

MR. MURPHY: Should I move somewhere else?

MS. NOWINA: The mic is working. People at the back

can't hear you.

MR. MURPHY: I am not sure what to do about that.

MS. NOWINA: Would it be difficult for you to move

somewhere else?

MR. MURPHY: I can do that, yes.

MS. NOWINA: Maybe you could switch spots with Ms.

Dover. We could hear her.


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MR. MURPHY: Is this one any better?

MS. NOWINA: Yes, that one is better.

MR. MURPHY: All right. There we go.

Can you still see me, Mr. Shalaby?

MR. SHALABY: I can.

MR. MURPHY: I wanted to ask some questions -- some of

this was covered before, but I am obviously going to ask it

from the perspective of solar industry, which is my client,

and solar power.

I want to start, if I can, with page 6 of your

presentation, which is the Exhibit K1.1. We have covered

that a little bit already, but I just wanted to make sure I

understood.

So as I look at that, what you have told -- sorry, I

don't mean to -- are you okay?

MR. SHALABY: Go ahead.

MR. MURPHY: So as I look at that, what I think you

have told other cross-examiners is that the plan that you

are seeking approval of through this process really relates

to what, in this second updated chart, is that planned

component, and that the committed and existing are -- well,

as described, committed and existing. So that your

discretion and methodology that you are seeking approval of

really relates to that planned component.

MR. SHALABY: We said a lot of things about that, yes.

MR. MURPHY: "Yes" is ultimately the answer.

MR. SHALABY: Yes, for the last few minutes, not to add

redundancy and, worse still, not to contradict anything I


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have said before.

MR. MURPHY: You have been taught well in witness

school, Mr. Shalaby, I have to say.

I want to turn, if I can, then, to page 54 and -5 of

that same slide. And I guess -- this is related to

renewable resources and the approach.

What this does here is identify your approach to

renewable portfolio, and your first step was to establish

the potential. Then on page 55, you identify the potential

for renewable resources and, in particular, of concern to my

client is solar, and you identified 488 as the potential.

And that's, as I understand it, the potential through

to the end of the plan; is that correct?


MR. MURPHY: Further, as I understand, that is -- all

of that potential comes from the renewable energy standard

offer program?

MR. SHALABY: For solar it is, yes.

MR. MURPHY: For solar, yes, correct. So for the

purposes -- and I think this is reflected on page 61 --

MR. SHALABY: You will note the asterisk about solar

being part of conservation, as well, when it is on customer

facilities.

MR. MURPHY: Agreed, and we will come to that.

MR. SHALABY: In addition to that, there is solar in

the conservation potential.

MR. MURPHY: Absolutely. And this is renewable supply.

MR. SHALABY: Right.


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MR. MURPHY: Then we will see on page 61 that you are

treating, for the purposes of the plan, that that 488 is

committed?

MR. SHALABY: Yes.

MR. MURPHY: So that in respect, if we go -- you know,

that box we saw on page 6, the planned component, the

incremental solar element of supply is zero?

MR. SHALABY: Yes.

MR. MURPHY: And I am wondering -- maybe I will ask:

Why is it zero?

MR. SHALABY: The information we have on cost and cost

projections vary. Your own evidence provides information on

costs, and I can take you to it, but it is primarily because

we think the costs will be high.

MR. MURPHY: All right. So if I go to the --

MR. SHALABY: And we follow all of that with it is

uncertain. Mr. Shepherd took me through a discussion on

technology evolution and cost reductions and others, as

well. We acknowledge that could happen.

We are not in a position today to rely on cost

reduction estimates that will bring solar to be comparable

to other supply sources for the energy it provides. When

that occurs, it is coming in the plan. But at this stage,

the information we have and the judgment we make - and it is

a judgment - is that the costs will be high. That judgment

could be wrong, and it will be modified if it is wrong.

MR. MURPHY: But so that I understand it correctly, the

plan you are seeking approval of has a methodology that


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would permit you to have zero incremental solar-sourced

supply in 2027?

MR. SHALABY: At this stage, subject to all of the

things we talked about. The plan will be reviewed.

Relative economics of options will be assessed again.

Sorting out of options will be done again when we come back

again.

MR. PIETREWICZ: And I would like to add to that, just

to make sure we're talking about the same thing, what Mr.

Shalaby is referring to is the planned component as

illustrated by that bright green bar on the top of that bar

chart.

However, there is the substantial committed component,

and within that committed component there is the nearly 500

megawatts of solar, and we have indicated in our evidence

and certainly in response to a number of CanSIA

interrogatories - for example, the OPA's response to CanSIA

interrogatory 25 - that while we recognize that solar

technology and associated economics will continue to improve

and that additional solar resources will arise over the

period of the plan, we add, however, that this additional

growth in solar resources is expected to result from the

renewable energy standard offer program.

And in other interrogatories, we point out that within

the conservation programs themselves, there's the potential

for additional solar uptake.

So I want to make sure that we're not sort of

presenting a false impression of the role of solar in the


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future within the IPSP. I just want to point out that at

present we see solar emerging from things such as the

renewable energy standard offer program and conservation

initiatives, which at present are this committed portion of

the plan, as opposed to through initiatives that we at this

point are having some discretion over and which we are

evaluating on a cost and other basis.

MR. MURPHY: No, and I appreciate. Far be it for me to

have, you know, on behalf -- we're happy to have you say

good things about solar and to have more. So that is all to

the good. But I just did want to focus on the planned part,

and I agree that I think we just went through, that that

RESOP program commits that -- is a part of the committed 488

that you are counting in your numbers.

But I guess what I am getting at is that, for the

planned part, you are asking for approval of your

methodology, and then a couple of specific procurements

unrelated to renewables.

MR. SHALABY: Yes.

MR. MURPHY: And so that once the Board says, yes, if

they do, we approve your methodology, in theory we could end

up in 2027 with no more solar than the 488 committed?

MR. SHALABY: No. The 488 that we put on the table is

not a constraint. It's not a limit. It is an assessment of

what's in the pipe today.

We think that not all of that will materialize. Some

of it will materialize. Some will not. And whatever does

not is subject for future contracts, perhaps.


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So we think the 500 megawatts or so that is in the pipe

today is indicative of an estimate for some time to come

until we come and renew our assessment and as technology

develops and experience in Ontario develops.

We will be a lot better off three years from now with

some solar power developed in Ontario, operating. I

indicated, I don't know whether it was this morning or

yesterday, there are facilities elsewhere in Arizona, for

example, that are being reported on regularly. People have

harder data and factual data to rely on elsewhere.

We will have that data in a year or two or three and we

will be in a much better position to estimate the

contribution and the economics of solar.

MR. MURPHY: So if I can, from the planning criteria

perspective, those six planning criteria, if I understood

your earlier answer correctly, your primary concern in solar

is the cost of criteria?

MR. SHALABY: Yes.

MR. MURPHY: Is there any other concern around any of

the others? Or it is just cost?

MR. SHALABY: Well, we describe the land use associated

with solar.

MR. MURPHY: Right.

MR. SHALABY: That's a description. Whether it becomes

a concern after a certain penetration of solar is subject to

assessment and monitoring. But it is primarily the cost at

this stage.

One of the features that is very attractive about solar


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is that it reduces power at times of system peak. The

correlation between the power produced with solar and system

peak is high. That gives it power -- the value of that

energy is much more valuable, it is higher then. So even if

it is more expensive, it has high value at that time.

MR. MURPHY: On the land use point, I understood,

though, that that was an environmental indicator and you

didn't use those to distinguish between any of the --

MR. SHALABY: Just a description.

MR. MURPHY: Right. Then would like to ask you a

question about the supply mix directive related to this, if

I can, and I am sure you have it memorized but you can

probably get it out, if you want.

Specifically, I was looking in point 2 of the supply

mix directive. It says:

"The government directs the OPA to create an

integrated power system plan to meet the following

goals:...

(2) Increase Ontario's use of renewable energy

such as hydroelectric, wind, solar, and biomass

for electricity generation."

MR. SHALABY: Yes.

MR. MURPHY: So my question relates to, from the

planned point of view, what -- from the, you know that plan,

that green box we were talking about – what, in the planned

point of view, addresses that goal in respect of solar?

MR. SHALABY: The consideration of solar installations,

as part of residential and commercial buildings is the part


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in the planned segment of the document that relates to

solar.

It is customer-based generation and smaller size

installations that will be prevalent in future years.

MR. MURPHY: But that is in the conservation category?

MR. SHALABY: That is right.

MR. MURPHY: So I think this is -- the number 2 is

directed -- I'm sorry, I don't mean to trap you. If you

want to take a look at it. Number 2 appears to be directed

more to the supply side of the equation than conservation

side of the equation.

So I am just wondering again, what is it in your plan

that addresses that number 2?

MR. SHALABY: Well, as I indicated, the consideration

of nearly 500 megawatts that's contracted for under the

standard offer is an indication of use for solar power into

the future. Some of that will materialize now. Some will

materialize later.

MR. MURPHY: So as I understand it, what you are

saying, then, is what we point to to say that we have

satisfied what the government's asking us to do in number 2

is the renewable energy standard offer program?

MR. SHALABY: Yes.

MR. MURPHY: And nothing else?

MR. SHALABY: Nothing else at this stage, yes.

MR. MURPHY: Okay. Then I would just -- on a related

point, you have referred I think to how you will be able to

update the plan with new information as it arises. And the


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one question I have on that is, the challenge that that

creates, of course, is as time progresses, the scope of room

for your discretion, for your planning discretion decreases.

MR. SHALABY: Yes.

MR. MURPHY: As we saw in the last year, about 12,000

megawatts approximately of room decreased?

MR. SHALABY: Yes.

MR. MURPHY: And so how have you -- when you look at

solar and the potential for it to develop and prices to come

down, how do you plan on dealing with having some solar

electricity generation when, as time progresses, your room

to accommodate it in the plan disappears?

MR. SHALABY: We indicated in discussions over the last

several days that the energy produced by solar power can, in

fact, be accommodated in the plan as displacing natural gas-

fired generation or other generation on peak.

So it can, indeed, be accommodated at a minimum to

displace energy and, further, to displace capacity that

would be needed in the future, as well.

But if you built your capacity and there is no more

room for capacity, then it will displace energy and I think

that is what your concern was.

MR. MURPHY: Yes.

MR. SHALABY: If you built up all of the capacity, how

would you accommodate it? You accommodate it by backing the

generation coming out of that capacity.

MR. MURPHY: Now, you raised conservation and I think

we agree that, definitionally, small-scale customer-based


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generation, including solar, is another area where you've

talked about the solar potential.

MR. SHALABY: Yes.

MR. MURPHY: As I understand it, you have identified

about 148 total megawatts for -- I think this is at page 46.

MR. SHALABY: There are numbers in the evidence and I

would refer to the conservation resources panel for details

on that. If you're going to get into details, then the

conservation panel is better able to deal with that.

MR. MURPHY: That's fine. I appreciate that. I guess

all I was really trying to find out -- and maybe this is

better for that panel, if so I will reserve it -- was

whether -- because as I understand it, of that 148 to 2010,

two megawatts was solar. I was wondering whether you were

expecting any of that to be anything other than RESOP-based?

MR. SHALABY: The mechanism of procuring it, you mean?

MR. MURPHY: Yes.

MR. SHALABY: Let them address that.

MR. MURPHY: Okay.

MR. PIETREWICZ: In the meantime, in case it helps,

OPA's response to CanSIA interrogatory 1 identifies at least

four sources of potential solar.

MR. MURPHY: Yes. So to follow-up on that, if we go to

the IPSP regulation, 424/04.

Just looking at 2(1)(2). Do you have it there, Mr.

Shalaby? Have you had a chance to look at that?

MR. SHALABY: Yes, I have it.

MR. MURPHY: It talks about the plan identifying and


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developing innovative strategies to accelerate the

implementation of conservation, energy efficiency and demand

management measures.

So we agree that small-scale generation is one of those

conservation measures?

MR. SHALABY: Yes.

MR. MURPHY: And is it -- so I am just trying to

understand kind of what you are saying vis-à-vis solar. In

particular, what satisfies the request or direction, or

whatever you would like to call it, to have an innovative

strategy for accelerating conservation?

Is it RESOP on the small scale?

MR. SHALABY: RESOP is the main program and it is very

innovative, and it is broad in the sense that it encourages

innovation in multiple ways and it is not prescriptive.

So RESOP is a program that is suited for solar power,

as evidenced by the large number of megawatts that have been

contracted.

MR. MURPHY: Well, we have agreed that's part of what's

committed under the plan.

MR. SHALABY: Yes.

MR. MURPHY: Is there anything in addition, from a plan

perspective, that addresses that point?

MR. SHALABY: There is, and that's the updates, the

flexibility, the indication that we made over and over that

we will reassess, and, with experience under our belt, we

will come here three years from now and see what the

technology developments have been, what the prospects for


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future technology development will be and make adjustments

to the plan and additions to the plan.

MR. MURPHY: So there is no strategy now. You say

there might be a strategy in the future?

MR. SHALABY: Well, that is a strategy of sorts.

MR. PIETREWICZ: If I could add, we currently have a

number of renewable procurements under way, or at least

directed to us, including, for example, this RES III

procurement, which is for up to 2,000 megawatts of renewable

power.

MR. MURPHY: Those are over 10 megawatts.

MR. PIETREWICZ: Over 10 megawatts.

MR. MURPHY: That is not conservation.

MR. PIETREWICZ: No. I am talking about the supply

procurement. Unless I am mistaken, my understanding is that

solar resources are not precluded from participating in this

kind of procurement.

While the procurement itself establishes an envelope

that we are calling "committed" in our evidence, the

specific composition of that 2,000 megawatts is subject to

the outcomes of the procurement process, and that would be a

competitive process.

MR. MURPHY: But that's a government-directed

procurement?

MR. PIETREWICZ: Yes. The RES III is a government-

directed procurement.

MR. MURPHY: So outside the scope of the planning

discretion, methodologies you are asking for approval from


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the Board?

MR. SHALABY: In the conservation family of programs,

there is metering provisions. There are a combination of

initiatives within similar programs. The conservation panel

can address that more fully.

So the conservation programs, together with the

renewable energy standard offer, together with the update

provisions in the planning, constitute the strategies for

accommodating and including nuclear -- solar as we go

further.

MR. MURPHY: Nuclear solar, now there is an idea. All

right. Well, I will follow up with the conservation panel,

but I appreciate your help. Thank you.

I just wanted to just understand a little bit -- and

this kind of follows up on some questions from before. This

relates to the treatment of -- we still keep out 424/04, the

regulation, if you have it, because it really arises out of

that, particularly in 2(1)(7). That talks about safety,

environmental protection, environmental sustainability are

considered in developing the plan.

You have answered lots of questions on that, but as I

understand what you have said is that the net result -- that

for safety and environmental protection, in essence you said

because there are government process rules out there to

protect it with respect to safety and environmental

protection, there was no -- you did not distinguish among

the various sources of electricity on either of those

grounds?


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MR. MURPHY: Then environmental sustainability, you

have gone through a long discussion. I don't want to recap

it, but that -- the environmental part of that became one of

the six planning criteria called environmental protection.

You said, with respect to that, that it didn't result

in you distinguishing among any source of electricity

either?

MR. SHALABY: We called it environmental performance.

MR. MURPHY: Yes.

MR. SHALABY: We described the environmental

performance by tracking the six indicators, but did not

differentiate in choices within the narrow corridor that

we're working with at this stage, yes.

MR. MURPHY: So where we're left with, at the end of --

looking at how you interpreted number 7, is that, basically,

if the Board approves your plan and your methodology, there

is nothing limiting -- there's nothing that affects your

discretion to pick any source of electricity related to

those three criteria outlined in 7?

MR. SHALABY: If they're complying with all

environmental protection regulations, if they comply with

all of the safety regulations, if they implement it in ways

that satisfy societal requirements in terms of process,

impacts, assessments, they meet our requirements in those

dimensions, yes.

MR. MURPHY: Well, I am talking more about your

discretion to pick one source of electricity or another.


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You are free to pick any, because of -- because you are

telling the Board that basically none of the criteria in 7

gave you any reason to pick among them.

MR. SHALABY: Well, if what is picked does not satisfy

the requirements -- for example, if we pick a generating

technology or fuel that results in air emissions that are

outside of government's intended policy on air emissions,

then that is -- does not satisfy the requirements.

What we chose for this plan and what we put in the plan

meets all of the requirements. For that reason, it didn't

differentiate between the options going in.

But we could conceive of options that do not meet the

requirements, and we indicated we didn't want to clutter the

evidence any further by putting things that don't work and

demonstrate that they don't work.

So we did not put residual oil, as an example, as an

option. We know if you put residual oil, it will result in

costs and emissions that are less favourable than other

options. So we picked the best in each family of options

and proceeded with that.

MR. MURPHY: So is it possible that someone sitting in

2025 or '27, looking back, would argue that more aggressive

safety standards today or more aggressive environmental

protection standards today would have made sense, would have

generated more intragenerational equity?

MR. SHALABY: You are indicating that future

requirements would be different than current requirements?

MR. MURPHY: No. I am indicating if somebody --


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thinking about intragenerational equity, right, the notion

that we need to think today about its impact on the person

tomorrow and 20 years from now at the end of the planned

period, what I am saying is it feasible that

intragenerational equity would include looking back from

that date in the future at the end of the plan and saying,

You know what, we should have had more aggressive safety

standards or more aggressive environmental protection

standards when we started the plan.

Is that a possible conclusion that is reasonable in

considering intragenerational equity?

MR. SHALABY: I will unbundle the question. Your

question is whether 20 years from now people will say, If we

had to do this over again, we would have gone with different

environmental standards or environmental protection

standards?

MR. MURPHY: Or safety, higher ones.

MR. SHALABY: Higher safety standards or higher...

Safety standards and environmental protection standards

respond to societal expectations and values, and as those

develop, those will develop, as well.

MR. MURPHY: As you were considering environmental

sustainability in the content -- in the context of the plan,

and you refer, in your evidence, to intergenerational

equity, did you consider the possibility that pressures

would increase safety standards and environmental standards

over the course of the plan?

MR. SHALABY: We know generally that has been the trend


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over the years. In that sense, environmental protection

standards and safety standards develop in time to be higher

standards, if that's your description, yes.

MR. MURPHY: Well, that's not quite what I asked. I

asked if the OPA considered, as it was developing the plan,

whether that was possible, that what you just described as

history.

MR. SHALABY: It is possible.

MR. MURPHY: Agreed. We agree on that. But I am

asking if -- based on the fact that it is possible, did you

consider it and its impact on the plan as you were

developing the plan?

MR. SHALABY: We considered it in the following way in

that the project proponents would have to meet future

regulations. The way we considered environmental protection

and safety is that project proponents will have to go

through measures that meet safety and environmental

protection standards. As those standards develop, project

proponents will meet those as well. So we did consider it,

that project proponents will meet different standards as

they evolve over time.

MR. MURPHY: Maybe I am confused and I apologize, but I

am actually talking about your plan. Not projects.

MS. NOWINA: Mr. Murphy --

MR. SHALABY: I don't believe anybody who tells me...

MR. MURPHY: I was enjoying the discussion so I leaned

away from the mike, I apologize.

I was talking more -- I was talking not about projects


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but talking about your plan and asking, as you look at your

plan -- because these, these factors in 7 apply to your

plan.

MR. SHALABY: Yes.

MR. MURPHY: So what I am asking about is, I mean it is

not -- I guess I am asking -- you are asked to consider

these factors.

MR. SHALABY: Yes.

MR. MURPHY: What I am asking is, would it not have

been reasonable to consider that you would have had, 20

years from now, quite a bit more aggressive environmentally

sustainable, environmentally protective and safety

standards, and that you ought to have developed a plan that

anticipated that? And you ought to have considered that at

the very least, from a plan perspective.

MR. SHALABY: In what way specifically?

MR. MURPHY: Any way.

MR. SHALABY: So for example, environmental protection

has to do with discharges of waste or water or heat,

containment, training processes, emergency response

processes. These continue to develop and evolve.

To pinpoint specifically how that will evolve over time

is difficult to chart at this stage, other than to

qualitative expect future proponents to meet future

regulations and future environmental protection standards.

MR. MURPHY: Sorry, just so I understand. So do I take

it from that, does that mean you didn't consider it?

MR. SHALABY: We considered that proponents will meet


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environmental protection and safety standards however they

develop.

MR. MURPHY: Okay.

MR. SHALABY: I don't know how much more we can say

about that.

MR. MURPHY: I think I understand, so I will move on.

The last point, my last set of questions, I just was -- sort

of a variation on that. And I think we have talked about

solar and identified cost as being a primary concern.

I am wondering, we've filed some evidence as you

referred to before, but in developing the plan, did you look

at other jurisdictions like Germany and the solar plan that

it has and – well, let me ask that question. Did you look

at Germany and assess it and what it did around renewables

and solar as you were developing the plan?

MR. SHALABY: We are aware of developments in other

jurisdictions, some more than others. But the detailed

evaluation we did not get into. Time did not permit a

detailed evaluation of progress elsewhere. Now, your

evidence provides a huge amount of information on Germany,

in particular.

MR. MURPHY: Absolutely. And I guess what I'm asking

is the evidence we provided and the plan assessment, I am

asking actually whether you had done that before you brought

your plan forward for approval and the answer is no.

MR. SHALABY: Not to the same level of detail that you

provided.

MR. MURPHY: Right. Did you at any point model or


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consider a plan that said: Let's have a plan that has us

lead the world in conservation, lead the world in renewable,

and let's model that and see what that looks like?

MR. SHALABY: We considered the directives that we

received to be our -- the definition of goals for this plan.

So the targets that are set by the ministerial directive are

what we considered in developing the plan.

MR. MURPHY: So that when it came to that notion of

leading the world in conservation and leading the world in

renewables, you viewed the directive as limiting your

discretion to consider that?

MR. SHALABY: We didn't consider it limiting. I am

just reluctant to accept "leading the world." What does

that mean? I mean, we -- we think our program on

conservation and our targets on conservation are very

ambitious. It takes us into much more efficient economy,

much more efficient use of electricity. The same amount of

electricity for 15 million people as being used by 12

million people today, larger economy.

That is a step in the right direction. Now, whether it

is leading the world, that's a piece that I am just thinking

that, determining that there is no Olympics for

conservation. I don't know how you determine even that.

MR. MURPHY: Okay.

MR. SHALABY: There's anecdotal evidence about

different jurisdictions. We looked at California very

carefully in conservation. We knew their track record. We

knew the standards they're using. We understand the


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approach they're using.

Different jurisdictions have different emphasis at

different times and different technologies so ...

MR. MURPHY: Just a second. Thank you very much, Mr.

Shalaby, I appreciate your time.

Thank you, Panel.

MR. SHALABY: Thanks.

MS. NOWINA: Thank you, Mr. Murphy. I would like to

get a check on who else might be cross-examining this panel

and decide what we are going to do regarding time. My list

has APPrO, Mr. Brett, but I don't have a time estimate.

MS. LEA: I don't believe Mr. Brett is here. I haven't

seen him for a couple of days so I don't anticipate he has

any questions.

MS. NOWINA: Have we heard from Mr. Keizer?

MS. LEA: Yes, indeed. Mr. Keizer does not have any

questions either, and apparently there was some mix-up about

that, so that was a misunderstanding, miscommunication.

MS. NOWINA: All right. Mr. Cowan? Still about ten

minutes, Mr. Cowan?

Mr. Cowan I mentioned 15 but I've refined my effort and

it should be five minutes for me...

MS. NOWINA: All right. Before you start, Mr. Cowan,

the Board panel has some questions, probably won't be more

than ten minutes.

Mr. Vegh, redirect; do you have a sense?

MR. VEGH: Less than five minutes.

MS. NOWINA: Less than five minutes. So, if court


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reporter is okay with that I think we should proceed and

finish with this panel before lunchtime.

I see some gratitude from the witness panel for doing

that.

So, Mr. Cowan, why don't you go ahead.

MR. COWAN: There we are on. Am I audible?

MS. NOWINA: You are.

CROSS-EXAMINATION BY MR. COWAN:

MR. COWAN: The Irish say: It a good thing when mike

works. Sorry about that. Good morning, and thank you to

the Board, the Board Staff, Mr. Shalaby and Mr. Pietrewicz.

I will try to keep my questions, as I said, to less than

five minutes.

These questions relate to a planning method and

approach. They work from the premises of the new three Rs

and one of the old ones. So I ask about reduce, reuse and

recycle, and arithmetic.

We will start with arithmetic, then, and some questions

about the forecast.

When we read a paper or hear the news and we see two or

three political or market forecasts which differ by only a

little, that is by less than their confidence limits,

statisticians and those with some training in the subject

are aware that practically and statistically they are much

the same forecast. That's a premise.

Did either your staff or your consultants calculate the

bounds of confidence for the low, high, and reference

forecasts of growth, that is the forecast from slide 30,


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K1.1?

Were the estimates of those --

MR. SHALABY: I would leave that to the next panel

coming up right after lunch. They can address that.

MR. COWAN: I wasn't going to ask how they calculated,

only if they were calculated.

MR. VEGH: Sorry, Madam Chair. It is actually a

methodology question. I think Mr. Cowan is asking about

bands of confidence, and I think the evidence will perhaps

-- without speaking for the evidence, the evidence takes a

different approach, which is high, medium and low, but that

really is a methodology question I think for the forecast

panel.

MR. COWAN: Then I would point out that if there are no

bounds of confidence, you have no basis for knowing that

your forecast is accurate plus or minus 15 percent?

MR. SHALABY: We do know it is indicative and it is

dependent on assumptions, and the load forecasting panel

themselves will tell you that precise numbers are more

likely to be wrong than right. But the band is a good basis

for planning.

I think the emphasis is: Is it a good basis for

planning at this time?

MR. COWAN: But it's a good basis for planning that is

unbounded by limits of confidence, for the time being, at

least?

MR. SHALABY: Well, we express confidence that that is

the --


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MR. COWAN: But not statistical confidence, not

scientifically-derived measured confidence.

MS. NOWINA: Mr. Cowan, it does sound like that is a

better question for the subsequent panel.

MR. COWAN: Okay, we will leave that for later in the

day, possibly, possibly later in the week.

If we could go to reduce, the capacity growth rate -

that is, the 1.2 percent forecast in the reference -

underpins the need for your various investments. So a lower

growth rate, if one could be arrived at, would imply lower

costs.

Would it have opinion possible, at an early stage, to

examine how additional investments in conservation, load

shifting, night storage, et cetera, of between $2 billion

and $15 billion might have been directed to reduce that

forecast growth rate from 1.2 to something less, say, 1

percent or less than 1 percent?

MR. SHALABY: Well, the conservation measures that are

being proposed as part of this plan reduce the demand to

almost zero percent over the long term. It's negative in

the -- it's negative growth in the early years of the plan,

all the way to 2022 or so. We come back to where we are

today in 2022. So it is zero until then.

MR. COWAN: On the slope on the slide, it is actually a

positive growth throughout the forecast period?

MR. SHALABY: Before conservation. Your question is:

With spending of money, would the growth be lower? And the

answer is, yes, with spending of conservation money the


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growth is lower. It is negative.

MR. COWAN: Did you examine, then, any further

increments to those investments that might have made it

still more negative?

MR. SHALABY: The conservation panel will talk about

the feasibility of further reductions. We examined the

feasibility of further conservation at this time and we

indicated we hope it is feasible. We will pursue more, but

we will plan supply to the degree that the conservation

targets that we show are indicated in our plan.

So the only thing that turns on whether more or less

conservation will materialize is whether we plan supply to

be ready to meet the demand that will result from the

conservation programs that we're estimating at this time.

If we're consuming more, and if program success and

technology success, customer acceptance, provides more

confidence going forward, then we will update our

conservation targets next time.

MR. COWAN: Well, there is a program effort to reduce

the growth rate on a consistent basis throughout built into

your method?

MR. SHALABY: Yes.

MR. COWAN: Okay, with respect to reuse - that is,

retained capacity that we'll be looking at here - the second

investment driver of consequence is the existing generation

capacity that carries on through to 2027, and perhaps

beyond. The more that survives, the less new investment

that is needed.


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You determined that about 9 gigawatts of existing

capacity would last through to 2027. Is that a correct

estimate?

MR. SHALABY: It's mostly the hydroelectric generation

-- primarily the hydroelectric generation that will be what

exists today and will survive without additional contracts

or additional investments.

MR. COWAN: A similar question with respect to reducing

then. Did you examine how much more capacity might be

continued in service if the IPSP provided incremental

investments of $1 to $12 billion, for example, in extra

maintenance and refurbishing in order to increase the amount

of capacity that might survive?

MR. SHALABY: Yes.

MR. COWAN: What did you find?

MR. SHALABY: We found that for the nuclear generation

segment of the plan, refurbishment is certainly a viable

option that can extend the useful life of nuclear

facilities, and that decision will be made at the time the

end of their useful life comes up.

MR. COWAN: And recycle --

MR. SHALABY: The same for some of the natural gas

facilities, whether it is NUG-contracted or Lennox-

contracted, these facilities can be maintained -- with

proper maintenance and right management, can last a long

time.

MR. COWAN: Then with respect to recycling, to what

extent does the IPSP envisage recycling components from


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facilities that may be closed, and are these assets planned

for? Does anyone know their value?

MR. PIETREWICZ: First, to directly respond to the

question --

MR. COWAN: Would it be useful if I repeat it?

MR. PIETREWICZ: I think I recall it.

MR. COWAN: Please.

MR. PIETREWICZ: To make sure I do, I think the

question was: Have we considered the potential value of

these facilities sort of in terms of recycling value, in

terms of sort of scrap value, if you will?

MR. COWAN: Well, hopefully more than scrap.

MR. PIETREWICZ: Okay. Then maybe I am not sure I

understood, then.

MR. COWAN: To what extent does the IPSP envisage

recycling significant components from the 16 gigawatts of

facilities that will likely be closed as the use of these

assets planned for?

MR. SHALABY: The most strategic asset that will be

reused are the sites themselves, the generating sites

expanded, and we indicated preference for sites that are in

current use, transmission corridors that are in current use

to be expanded before new sites are -- and new corridors are

explored.

MR. COWAN: Things like --

MR. SHALABY: So the equipment itself is something that

we did not investigate in detail the reuse of existing

facilities, the equipment itself.


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MR. COWAN: Things like thyristors in nuclear plants

are valuable assets, but you didn't consider them?

MR. SHALABY: We did not get into that detail.

MR. COWAN: We would be buying new, then, so far?

MR. SHALABY: Well, we do not specify how proponents

will develop their projects and what extent they will reuse

equipment or go to new equipment.

MR. COWAN: Is there an intent at some point in the not

too distant future to value these kinds of assets?

MR. SHALABY: Not to the level of detail that you are

talking about, specific components of existing generating

stations to be reused. I think we will leave that to the

proponents and developers of these new facilities.

MR. COWAN: The last question, then, I think: Would I

be wrong in guessing that these assets that would be

residual might be valued in the billions?

MR. SHALABY: No, you will not.

MR. COWAN: I beg your pardon?

MR. SHALABY: You will not be wrong.

MR. COWAN: No, okay. So it would be worth thinking

about?

MR. SHALABY: I answered in -- the 10,000 megawatts

that will stay in service by 2027, is that what you meant?

MR. COWAN: No, the scrapped components from the 16

that will not be in service.

MR. SHALABY: Oh, that I don't have a measure on. I

don't have a measure on what that would be. Some of it may

in fact be liabilities, not assets.


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MR. COWAN: Oh, yes, no question.

So in closing, then, we point out that we believe that

the three Rs, the new ones, plus one of the old ones, at

least, are guides to billions in savings and, hence, greater

efficiency and prudence. We feel as farmers that these

three Rs and the other should help guide your further

thinking and be a more conspicuous part of your methods, I

think particularly with respect to reusing.

You have given -- sorry, recycling. You given reuse

and reduction, at least, some apparent thought. Beyond

that, we want you to be assured of the OFA's support in your

efforts to provide Ontario with a clear and sound plan for

conservation and electricity provision. Again, please

accept our thanks and the respect of myself and the farmers

who have sent me.

MR. SHALABY: Thank you, Mr. Cowan.

MS. NOWINA: Thank you, Mr. Cowan. The Board Panel has

a few questions which we will ask you now, before redirect.

Mr. Quesnelle will start.

QUESTIONS FROM THE BOARD:

MR. QUESNELLE: Thank you very much, Madam Chair. I

don't want to take you over areas other than to mention that

-- give you the reference where my questions are coming

from. There was an exchange that you had, Mr. Shalaby, with

both Mr. Shepherd and Mr. Buonaguro the other day and it was

with regard to the notion that seemed to -- your exchange

seemed to change the way they were regarding your evidence

and it was with the reference plan and a discussion on the


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robustness of the plan.

You had mentioned - I don't need to bring you to it -

but it was the discussion on the alternate components or

alternate plans.

Your comments that they were all a real plan. They

were all real plans and that we were to accept them all as

potential outcomes.

I just wanted to make sure that we understand exactly

how that fits in and how we should be looking at it, because

it is -- the characterization in that manner, I see as a

slight variation from the way the evidence was originally

presented. I am not saying it is in conflict with, but it

is a nuance element, that I think is valuable that we pursue

this a little further, and make sure we have this right.

The evidence, in Exhibit D, tab 9, the actual -- I am

reading the resource requirements, schedule 1 in Exhibit D,

tab 9. You speak to the reference plan as being -- this is

the last paragraph on the page, line 22.

MS. NOWINA: Page 1?

MR. QUESNELLE: Sorry, page 1.

MR. SHALABY: D-9-1 on page?

MR. QUESNELLE: Page 1 of 32, schedule 1.

MR. SHALABY: Yes, I see it.

MR. QUESNELLE: Line 22, starting with the sentence:

"The reference conditions reflect a particular set

of expectations or assumptions related to load

forecast, total resource," and continues.

I just wanted to think of that in terms of what you


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mentioned about the other proposals which are highlighted in

G-1-1 under the plan robustness section, and it goes on

about 2A, 2B and the different scenarios with Pickering on

refurbished or not.

I am trying to separate, is there a hierarchy to the

reference plan in relation to the others? Or would they all

fit under that description that I just read to you, that is,

basically they are conditions that reflect a particular set

of expectations or assumptions?

What I am asking you is: Can we apply that definition

to any one of these and should we view them as equal in our

understanding of what may happen? Or are you putting a

hierarchy on the reference plan, and not to provide a

characterization that you may not accept, but is the

reference plan the more likely scenario and the others are

possibilities? Or as you said the other day, they are all

real plans?

I want to go beyond the nuance of this and get your

reaction to that.

MR. SHALABY: I understand your question. And I think

it is -- there is a requirement for specific, what are the

costs of the plan? What are the environmental impacts of

the plan? Thinking in ranges is more difficult than

thinking in straight lines or specific lines.

My estimation is any of the outcomes that we describe

are likely, other outcomes are likely. It is very unlikely

the reference plan will be followed in the exact

expectations that we are documenting here.


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It is provided here for reference, and reference

meaning you would know when demand is higher or lower than

we estimated. You would know whether renewables are higher

or lower. It is just a compass, but not an indication of

any higher likelihood than a band around it, including...

So likelihood of Pickering being developed or not

developed, likelihood of conservation being higher or lower.

I think it is a richer way of thinking about the planning

and it's a range, and the likelihoods are open to current

conditions being different in the future than estimated at

this time.

It is a more complex concept and a more complex way of

thinking about plans, but I think it is a more useful and a

more helpful way of understanding how planning works.

MR. QUESNELLE: Thank you, that's very helpful. Just

one other area and we have, again, this comes from ground

that you have covered quite extensively with others. It's

on the, what is being sought in the approval.

You mentioned a few times and in some detail

methodologies. So I am not going to ask you to come back

and give me more details on what methodologies, I think we

have enough on the record there as a guide. But I am going

to pose a question to you as to whether or not the OPA, in

seeking approval of methodologies - I will put a slightly

different twist on that - and if the Board were to accept

outcomes and accept methodologies as opposed to approving,

do you see any difference in those two basically outcomes

from this proceeding?


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MR. SHALABY: No. They're both an indication that we

have complied with the regulation 424, including the very

many considerations that have to be taken into account.

So if you indicate that we complied with the regulation

424, considered all of the things that are in regulation

424, that is, at least to the non-legal mind, synonymous

with accepting methodology or approving methodology. The

three of them would amount to similar things in our minds.

MR. QUESNELLE: I suppose what I am looking for, do you

see any difference between -- I don't want to tread on the

legality of this, but just from your own perspective -- an

approval being a testing of something as being the

appropriate method as opposed to an acceptance of something

which is maybe one of many?

MR. SHALABY: Perhaps the latter is more realistic.

There is no unique way of doing anything. But if this is

one way that is acceptable amongst many other ways, that

perhaps is reflective of the nature of these methodologies

and the nature of these techniques.

MR. QUESNELLE: That wouldn't fall short of what the

OPA is seeking?

MR. SHALABY: That will not fall short, in my opinion.

I will leave the legal beagles to argue what they like

afterwards.

MR. QUESNELLE: That's all I had, Madam Chair. Thank

you very much.

MR. SHALABY: Thank you.

MR. NOWINA: I have a couple of questions, Mr. Shalaby,


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and I will just -- or Mr. Pietrewicz, whichever one of you

wants to respond.

I will just follow up on Mr. Quesnelle's question, to

be clear on the approvals sought and I won't go back to

whether methodologies are acceptance or approval. I will

put that in the category of that's one of the things that

you stated was you sought approvals on. The other was the

specific procurement contracts within the next few years.

You sought approval for those; is that right?

MR. SHALABY: Authority to procure --

MS. NOWINA: Authority to procure.

MR. SHALABY: -- the three specific facilities we talked

about.

MS. NOWINA: Right. And then I am a little bit less

certain on approval for initiatives to develop potential

procurements or transmission in the future. Are you seeking

approval for that, as well?

MR. SHALABY: Not to the OPA. The OPA will not develop

transmission options, nor will it conduct RFPs for

transmission options.

It is acceptance perhaps that transmitters develop

these and I don't know the nature of the -- that

transmitters will seek your approval, whether it is in

budgetary terms or -- in other ways that they will seek

through license conditions or otherwise.

So we are -- more generally, we're saying to

transmitters, that these options -- the seven or eight or

nine options we talked about are -- it's in the interests of


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the customers in Ontario to develop these options further.

And whether the money they spent on that and the effort

they spent on that needs to be approved at this Board in

their rate hearings or their capital program hearings or

section 92 proceedings, we are less specific about that.

But we do not seek approval ourselves for the proceeding of

transmission options. It's transmitters that would seek

that.

MS. NOWINA: All right, I understand. They have future

requirements for approvals before this Board if they want to

construct, in any case.

MR. SHALABY: Yes.

MS. NOWINA: But it brings me to a broader question

about what approval of the plan may be. The Electricity Act

says the Board may approve a plan or refer it back. That's

the wording.

So from your discussion with Mr. Quesnelle, I take that

plan to be a range of outcomes that you have discussed that

are more certain in the first three years, far less certain

in the future, and you may bring it back for refinement of

that -- will bring it back every three years.

So I understand that plan to be a range of outcomes.

So when we approve a plan, do we approve that range of

outcomes as being -- perhaps we can use the word is

"reasonable" over the time frame of plan, and the

development that you are suggesting is also reasonable

within the time frame of that plan?

I don't want to put words in your mouth, but would that


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be an adequate way to describe the approvals that are

required?

MR. SHALABY: That would be an adequate way. And I

would take us back to slide 4 in the deck that were

presented on day 1 that describes, What is the plan? And

the plan is the capability to meet Ontario's needs under a

range of conditions.

So in approving the plan, it may be helpful to go back

to what we think the plan is. The plan is an implementation

of supply mix directive, its capability, the plan's

capability to meet a range of conditions.

It is a set of planning methodologies and approaches.

So the three things -- three of the five bullets describe if

you accept planning methodologies and approaches, if you

grant us the capability to meet a range of conditions and if

you accept that we have met the supply mix directive, that

constitutes acceptance or approval of the plan, in our

minds.

MS. NOWINA: Thanks. That's helpful. Then my second

and last question is about your six planning criteria. I

hesitate to take you back there, but I will, because I am

developing a mental image and I want to be very certain that

my mental image is correct in what you intended me to take

from your evidence in your cross-examination.

I took from your evidence, especially the oral evidence

over the last week or so, is that those criteria have been

applied by the OPA essentially as a series of gates, that

the feasibility gate must be passed before the reliability


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gate is considered, and so forth, so that when you get to

the final gate, the environmental process and the societal

acceptance, there was no difference, because everything

essentially had been weeded out through the other gates. Is

my mental image correct?

MR. SHALABY: It can be enhanced by knowing that the

things that are put through the filters or the gates are

themselves deemed to be acceptable and deemed to be

environmentally -- can be met in -- meet environmental

protection, safety and regulations going forward.

So it is not a random take, and then if they pass the

first four filters they're acceptable. They're put in with

judgment about their acceptability at the beginning, as

well.

MS. NOWINA: So you almost have a threshold test that

they meet environmental standards?

MR. SHALABY: Yes.

MS. NOWINA: Is that how I took your evidence?

MR. SHALABY: Yes.

MS. NOWINA: Then they go through the series of gates.

Then beyond the environmental standards, any benefit above

those standards essentially made no difference when you

reached those last two gates, because they had been filtered

out at that point?

MR. SHALABY: If the results of putting them together

results in violating the collective result -- for example,

emissions. Any one of the generators can meet environmental

protection standards, emission standards locally, but


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together they result in a larger amount of SO2 or CO2 or NOx

than the collective provincial standards.

That's when we look at them in collective fashion.

MS. NOWINA: All right. Thank you.

MR. SHALABY: And the range of options what we examined

met both individual standards and the collective standards

at the end, but they could violate collective standards at

the end. So in the case that we presented, the reference

case and its variations, they did not violate the collective

standards, as well.

MS. NOWINA: All right. Thank you. That's very

helpful. That concludes the first panel. Thank you very

much, gentlemen. It's been a long week or so.

MR. VEGH: I have re-examination.

MS. NOWINA: Let me finish thanking them, Mr. Vegh, and

then I will pass them over to you.

MR. VEGH: Sorry.

MS. NOWINA: However, we will see you again very

shortly, Mr. Pietrewicz and, you, Mr. Shalaby, later.

Mr. Vegh, you had a point?

RE-EXAMINATION BY MR. VEGH:

MR. VEGH: I do apologize for interjecting, Madam

Chair, but Mr. Shalaby is in a hurry to get out.

MS. NOWINA: He is trying to bolt through the door,

yes.

MR. SHALABY: I made a forecast that turned out to be

wrong, several days out.

MR. VEGH: Panel, I have some questions of


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clarification on some rather mundane issues that are not

going to reach the level of sophistication and intelligence

that you have been hearing questions on for the first week,

but there are some pretty technical points I would like to

clarify that come out off the evidence.

Just to have handy, I will be referring to volumes 2

and 5 of the transcript, as well as to Exhibit K2.1, which

is the GEC cross-examination materials.

MR. SHALABY: Yes, we have it.

MR. VEGH: Okay. First, at volume 2 of the transcript,

Mr. Shalaby, you were asked questions by Mr. Poch on the

attributes of CHP. So that's at pages 168 to 169. It

really starts with the question at page 168, at line 20.

And he, Mr. Poch, is describing to you the attributes

of CHP and says that:

"CHP is a little unusual. It has some of those

attributes about the ability to follow load on a

planning time line and on a diurnal and seasonal

operating time frame."

He goes on. And there was some confusion in the answer

where he clarifies he was looking for -- was talking about

CHP at line is 1 on page 169, and again he asks you some

questions. Then on page, line 5 of page 169, he says:

"It naturally has those attributes."

It wasn't clear to me, from reading the questions and

answers, because he went back and forth a bit, about what

load the CHP is following. Is it the load of the customer

or the load of the system? What are the attributes of load


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following that you are talking about in that section?

MR. SHALABY: It was clear in line 2 of 169, page 169,

that it typically follows a steam load. Combined heat and

power is, as it indicates, a facility that generates both

steam and electricity.

Typically, the steam requirement is the driver for how

the facility operates. It meets the steam requirements of

the host, and electricity is a by-product that is generated

as the steam is generated. So my answer is very clear. It

typically follows a steam load.

MR. VEGH: Could you just elaborate on what is the

difference between that, if any, the steam load of the

customer and of the system, and why that is relevant for

planning purposes?

MR. SHALABY: There is -- there could be correlation,

but typically there isn't, or maybe some consumers, it will

be correlated, the electricity consumption and steam

consumption. But, as an example, steam demand can be higher

in the wintertime, and electricity generated with it is

generated in the wintertime. There may not be steam

requirements in the summertime if it's a university

facility, for example, or a hospital. Or the requirements

for steam are lower in the summertime than the wintertime.

The demand for the system for electricity is higher in

the summer than the winter. So there could be a difference

in the requirements for electricity in the system basis and

the requirements for steam in the specific facilities of a

particular customer. And this varies from customer to


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customer and varies from season to season and many, many

other considerations to do with the specific requirements on

a specific site.

MR. VEGH: Thank you. My next question, I think it is

for you, Mr. Pietrewicz, and it comes out of the GEC cross-

examination materials, Exhibit K2.1. One of the attachments

to K2.1 is the IESO operability report.

This is in the evidence elsewhere, as well, but in is a

handy place to refer to it. And particularly at page 15 of

the IESO operability report there is a discussion of the

results of surplus base-load generation.

MR. PIETREWICZ: Yes, I see it.

MR. VEGH: You were asked some questions about that, I

think from several parties. The one in particular that was

asking you questions about the issue of excess base-load

generation and how it arises during the course of the plan

was Mr. Poch and that's -- I won't take you to it at volume

3, page 60 where there are some questions about instances of

excess base-load generation.

I know that Ms. Wright from the IESO will be available

to address this report. But there were a lot of questions

about the increase in excess base-load generation during the

period 2012 to 2014. That's demonstrated on table 3, and I

think elsewhere throughout the document you see the increase

from 2012 to 2014.

Can you tell me what that increase -- if you know, what

is that increase attributable to?

MR. PIETREWICZ: Specifically, I am not sure I can


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narrow it down to a specific --


MR. PIETREWICZ: -- single resource. However, I can

provide what I know to be the context during this period.

There are several things happening during this period, 2012

to 2014.

First of all, we have -- we approached pretty much the

full complement of nuclear generation in Ontario at this

time. So specifically, the return to service of the Bruce A

units that are expected to go, undergo refurbishment prior

to that. So that is really the change in nuclear

availability during that period.

In addition, I imagine we have, as simulated, we have a

considerable increase in the amount of other types of

generation resources or conservation resources, including

planned or committed wind power, including committed water

power, committed conservation, and CHP resources.

In addition, as simulated, we continue to have some

amount of coal-fired generation available during this

period, which I would expect would contribute to the base-

load production in this particular simulation.

MR. VEGH: Thank you.

Finally, to you, Mr. Shalaby, at volume 5 of the

transcript, page 167, Mr. Manning is asking you some

questions about the prefiled evidence and there's a

quotation from the prefiled evidence in the middle of page

167 at line 12, and the reference is to Exhibit E-3-5. And

there is a quotation from that evidence.


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And the cross-examination lays out the quotation. I

won't read all of it, but it starts with the sentence, "The

OPA recommends that a purchase with Manitoba be further

explored." Then I think Mr. Manning spent considerable time,

I believe over the next ten pages, focussing on what the

word "recommend" means or emphasizing "recommend" and just

what that term is meant to mean in this evidence.

And my question for you -- and you had a back and forth

and a discussion around what that term might mean.

My question for you, Mr. Shalaby, this is Exhibit E-3-

5, were you the primary author of Exhibit E-3-5?

MR. SHALABY: No.

MR. VEGH: Who was?

MR. SHALABY: The transmission panel that will be

coming in here in future panels coming in. So my planning

staff.

MR. VEGH: That's more Mr. Chow and Mr. Young, I think?

MR. SHALABY: Yes.

MR. VEGH: So it might make more sense that we raise

that question with them in terms of the intention of what

was meant by the word "recommendation."

Thank you, those are my questions, Madam Chair.

MS. NOWINA: Thank you very much. Thank you, again,

witness panel.

We will take our lunch break now. When we return we

will begin the panel on reference forecast and reserve

requirements, Mr. Vegh, with your direct. And then Mr.

Buonaguro you are first up? No?


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MR. SHEPHERD: Madam Chair, Mr. Buonaguro has

graciously allowed me to go first as I have another

commitment later.

MS. NOWINA: All right, Mr. Shepherd.

We will break until -- I will give you your hour and a

half. So we will return at 2:25 and then we probably will

not have an afternoon break. We will go through until 4:30

at that point.

--- Luncheon recess taken at 12:55 p.m.

--- Upon resuming at 2:33 p.m.

PROCEDURAL MATTERS:


Welcome, ladies and gentlemen, and new witness panel.

Before we begin with the new witness panel, I would like to

make a comment on our schedule.

Board Staff has given me the estimates that you have

given them on this panel, and, frankly, it makes me very

nervous about the length of this proceeding overall. If we

extrapolate from what we're seeing here to the remainder of

the proceeding, we're all going to be here for a very long

time.

I am not sure that being here for a very long time

serves anyone's interest or serves the public interest. So

a couple of comments that I would like to make, based on our

experience of the first panel: First, that I expect cross-

examiners to go fairly quickly to their questions. I don't

expect a lot of preamble, and I don't expect essentially

argument or putting positions on the record as part of


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cross-examination.

For parties who follow later in the process, I don't

expect repetition of questions that have already been asked

and answered, unless you truly require clarification, and

that's fine.

But the end result is that for those people who are

taking a lead in the cross-examination, the first couple up,

when I see large amounts of time, I expect that and I have

no problem with that. But when I see folks that are towards

the end of the cross-examination schedule and they require

vast amounts of time, I am concerned about that and I would

ask them to consider whether or not they can shorten their

cross-examination.

Now, all of that is not to say that the cross-

examination of the first panel wasn't valuable or helpful.

It was. It was very good, and we were pleased with what we

learned there. But we also learned some procedural things

that hopefully will help us going forward, so I would like

you all to take that to heart, and we will find some kind of

prize for the person who talks to Ms. Lea and gives her the

largest reduction in their estimate.

Conservation is the key word, yes, Dr. Balsillie says.

All right, enough said. Mr. Vegh, do you want to

introduce your panel?

MR. VEGH: Thank you, Madam Chair. As you can tell,

it's a large panel, so I would like to lay out quickly how I

propose to present this panel.

First, I propose to have the witnesses sworn. Then I


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will introduce each of them very shortly for the record and

point up their CVs, not go through a lot of detail, and then

after the witnesses are introduced, I was going to address,

just for the benefit of the parties and the Panel, a bit of

the CIMS issue; that is, where does this evidence lead off

and how does it feed into some of the other sections?

That came you are during the cross-examination of the

initial panel. It might be helpful to sort of set that out

up front. I do that not in the way of giving evidence, but

as a guide to the witnesses.

MS. NOWINA: All right. Thank you, Mr. Vegh.

MR. VEGH: So if I could have the witnesses sworn,

please.

MS. LEA: I think, Mr. Vegh, some of them have been

sworn, because they were here for the initial presentation,

so perhaps those who haven't been sworn, please come

forward.

ONTARIO POWER AUTHORITY – PANEL 3 – REFERENCE FORECAST

AND RESERVE REQUIREMENTS

^Martin Adelaar, Affirmed

^Christopher Bataille, Affirmed

^Lily Buja-Bijunas, Previously Sworn.

^Karen Frecker, Previously Sworn.

^Bob Gibbons, Previously Sworn.

^Andrew Pietrewicz, Previously Sworn.

^Victor Stein, Affirmed

MS. NOWINA: You can go ahead, Mr. Vegh.

EXAMINATION BY MR. VEGH:


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MR. VEGH: Thank you, Madam Chair. So just in terms of

where we are in the proceeding, at Exhibit K1.2, the third

box in the table is a reference forecast and reserve

requirements panel and there is a list of all of the members

on that panel.

In the introductory evidence on the first day at

Exhibit K1.1, this panel will be addressing slides 25 to 36

of the introductory evidence that is a reference forecast,

and reserve requirements. So what I propose to do, Madam

Chair, is, for each member of the panel, to introduce them

by reference to their CVs, and those are at Exhibit A, tab

7, schedule 1.

All I propose to do, Madam Chair is, identify the

witness for the benefit of the parties, point them to their

CV and ask them to briefly -- point them to their CV. I

will refer to their evidence that they are speaking to and

ask them to briefly identify their experience and how that

is relevant to the evidence.

I don't propose to go through the entire CV for the

panel.

So if I could start with you, Ms. Buja-Bijunas. Good

afternoon.

MS. BUJA-BIJUNAS: Good afternoon.

MR. VEGH: Your CV is at Exhibit A-7-1, page 1. I

understand that you will be giving evidence, the lead OPA

evidence, on the load forecast?

MS. BUJA-BIJUNAS: That's correct.

MR. VEGH: And that's at Exhibit D-1-1.


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MR. VEGH: And so, Ms. Buja-Bijunas, can you just

briefly describe how your experience is relevant to this

evidence?

MS. BUJA-BIJUNAS: Before joining the OPA, I worked in

a load forecasting capacity at Ontario Hydro for eight

years.

Can you hear me? Oh, can you hear me now? Okay.

Before joining the OPA, I worked in a load forecasting

capacity at Ontario Hydro for eight years.

MR. VEGH: Thank you, Ms. Buja-Bijunas. And to your

right is Mr. Martin Adelaar. Good afternoon, Mr. Adelaar.

MR. ADELAAR: Good afternoon.

MR. VEGH: Your CV is at Exhibit A-7-3 -- A-7-3, page

1; is that correct?

MR. ADELAAR: That's correct.

MR. VEGH: And you will be -- the evidence that you

prepared or participated in is at Exhibit D-1, attachment A-

3.

MR. ADELAAR: That's correct.

MR. VEGH: And, Mr. Adelaar, could you please provide

the panel with a brief description of your experience and

how it is relevant to the evidence that you prepared?

MR. ADELAAR: I have been working in the field of

energy efficiency and energy management for over 25 years in

all three sectors, residential, commercial and industrial.

MR. VEGH: Thank you, Mr. Adelaar.

On Ms. Buja-Bijunas's left is Chris Bataille. Good


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afternoon, Mr. Bataille.

MR. BATAILLE: Good afternoon.

MR. VEGH: Your CV is at Exhibit A-7-2, page 1.

MR. BATAILLE: Yes.

MR. VEGH: And I understand you will be speaking to

Exhibit D-1-1, A-3, along with Mr. Adelaar, as well as to

Exhibit D-4-1, attachment 6, which add addresses the CIMS

methodology of MKJA?

MR. BATAILLE: Yes. I have been an energy and

environmental policy analyst for the last 11 years and one

of the co-creators of the CIMS model.

MR. VEGH: Thank you. Then to your left, Karen

Frecker. Good afternoon, Ms. Frecker.

MS. FRECKER: Good afternoon.

MR. VEGH: Your CV is at Exhibit A-7-1, page 7?

MS. FRECKER: It is.

MR. VEGH: And perhaps you could address your role in

preparing this evidence.

MS. FRECKER: I have been a power system planner with

the OPA since May of 2005. During that time, I participated

in the development of the supply mix advice, the load

forecast conservation and discussion papers, as well as

completing analysis related to the current evidence before

the Board with respect to load forecasting.

MR. VEGH: Thank you, Ms. Frecker. And I know you are

fairly new to this, but think about it. A week ago Mr.

Pietrewicz didn't have any experience in front of the Board

either, and now he is an old pro.


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[Laughter]

MR. VEGH: So that's the load forecast side of the

panel. And also on this panel we have the reserve

requirement side of the panel, and I will just reintroduce

you to Mr. Pietrewicz. You have seen his CV and you have

heard his experience already, so I will just say hello to

the panel.

MR. PIETREWICZ: Good afternoon, Madam Chair, Members

of the Panel.

MS. NOWINA: Nice to see you back, Mr. Pietrewicz. We

were afraid you wouldn't come back.

MR. VEGH: Next to Mr. Pietrewicz is Bob Gibbons. Good

afternoon, Mr. Gibbons.

MR. GIBBONS: Good afternoon, Mr. Vegh.

MR. VEGH: Your CV is at Exhibit A-7-1, page 8; is that

right?

MR. GIBBONS: That's correct.

SPEAKER 1: Could you please briefly outline your

experience and how it is relevant to the evidence that you

will be addressing on this panel.

MR. GIBBONS: I joined the OPA in 2005 as director of

resource integration. Before joining the Ontario Power

Authority, I was manager of long-term forecast and

assessment with the Independent Electricity System Operator,

since its inception in 2000.

In this position, I was responsible for producing the

quarterly 18-month outlooks as well as the annual ten-year

forecasts of generation and transmission adequacy.


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I was involved with the determination of NPCC reserve

requirements and participation in NPCC and NERC committees.

Before that, I was with Ontario Hydro for about 28

years in various operations and planning functions.

MR. VEGH: Sorry, Mr. Gibbons, I should have said at

the outset that your evidence is going to relate to Exhibits

D-2-1 and D-3-1.

MR. GIBBONS: That's correct.

MR. VEGH: Next to Mr. Gibbons is Mr. Victor Stein.

Good afternoon, Mr. Stein.

MR. STEIN: Good afternoon.

MR. VEGH: Your CV is at Exhibit A-7-1, page 14.

MR. STEIN: Yes. Yes.

MR. VEGH: And you will also be addressing

Exhibits D-2-1 and D-3-1.

MR. STEIN: Yes.

MR. VEGH: Could you please outline for the panel some

of your experience and how it is relevant to the evidence

you are presenting.

MR. STEIN: I have been an economist for more than 30

years. I have been – I started off as an economic analyst

over at the Ontario Ministry of Finance. I taught economics

at Ryerson University. I did economic planning and

engineering, economic analysis at Ontario Hydro and its

successor company, Hydro One. I have led seminars on

macroeconomic impact analysis and I have presented

professional papers on benefit-cost analysis. And I have

been advisor at the Ontario Ministry of Energy.


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MR. VEGH: Thank you, Mr. Stein.

Before presenting the panel for cross-examination,

Madam Chair, as I indicated, I thought it might be helpful

at the outset to just address, as I say, the CIMS between

the issues addressed by this panel and subsequent panels.

First, on the reference forecast side of the panel,

that is the four people on the far end, the reference

forecast is a stand-alone piece of evidence in D-1-1 and it

incorporates information provided by the external

consultants, Mr. Adelaar and Mr. Bataille. The one CIMS

issue that does arise is with respect to the evidence on the

reference forecast and the evidence with respect to

conservation.

The two are linked in a couple of ways, in the sense

that the reference forecast has naturally occurring

conservation built into it and so I think that issue has

become clear over the first week. But if people want to

address the issue of naturally occurring conservation and

how it goes into the reference forecast, this is really the

panel to address that.

The other issue of CIMS is that the two external

consultants, Mr. Adelaar and Mr. Bataille, provide -- also

provided evidence that is relied upon by the conservation

evidence with respect to the potential of various sources of

conservation.

Now, they're here today, but the plan is not to have

them present as part of the conservation panel. When we met

with the parties and Board Staff on procedures day, we


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proposed that approach because they're really, frankly,

wasn't a lot of interrogatories or interest in terms of the

potential of conservation models. The real issue was with

respect to how the OPA made use of that information in

coming up with the conservation plan.

So we would say to the parties, if they do have

questions on conservation potential materials prepared by

Mr. Adelaar or Mr. Bataille, and they do want those

addressed on the record, that this would be the opportunity

even though it is a bit out of step, but they won't be back

for the conservation panel.

So that's the -- kind of the CIMS issue between this

panel and the conservation panel coming up, and I am sure we

will find in the questioning that there may be more CIMS

issue but those were the ones that present themselves to me,

obviously.

With respect to the reserve requirement side, the left

side of the -- or your left side of the panel, the main CIMS

issues, I believe, will arise with respect to Exhibit D-3-1,

which sets the base-load requirements and the peaking

requirements as resource requirements of the plan.

So that piece, D-3-1; and then the other pieces of the

substantive evidence, which look at how those requirements

are met, particularly D-6-1 and D-8-1. I will just break it

up a little bit. D-3-1, as Mr. Gibbons addressed on the

first day, addresses the resource requirements by reference

to base load, intermediate, and peak requirements. So the

base-load requirements of the plan, the base-load resource


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requirements are addressed in Exhibit D-3-1.

Then later on, when we get to the panel that's dealing

with non-renewable resources, they will be addressing how

nuclear, in particular, contributes to meeting the base-load

requirement, how other components of the – nuclear, in

particular, but of course other resources also contribute to

meeting the base-load requirements. So this panel addresses

how the requirement was established. Subsequent panels will

address how that requirement was met through different types

of resources.

I am going to come back to that in a minute, because

it's -- part of the story is a bit complicated. But just to

finish, in terms of D-3-1 it says the base-load requirement.

It also sets the peaking requirements for the plan, the

peaking resource requirements, that's addressed in Exhibit

D-3-1, but then Exhibit D-8-1 which addresses natural gas

addresses how natural gas is used to meet that peaking

requirement.

So again, this panel addresses how the requirements are

set. Subsequent panels will address how the requirements

are met.

I want to go back to D-3-1 again because when we get to

the base-load requirements, there is -- what Mr. Shalaby

referred to as a bit of circularity. And I just want to

unpack it again.

So D-3-1 sets the base-load requirement. The base-load

requirements are set by an economic model which looks at how

different resources contribute to meeting base-load


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requirements.

So it looks at the incremental -- it's an economic

measure of base load. It looks at how incremental resources

contribute to meeting that requirement, and that involves a

review of the costs of those resources.

So it is in D-3-1 where you find the evidence with

respect to, in particular, the cost of nuclear to meet base

load, the alternative cost of combined cycle gas turbine to

meet base load, and where those costs intersect to meet the

-- to determine the incremental base-load requirements of

the plan.

I say this, because I have spoken to many parties who

are particularly interested in the cost of nuclear and have

let them know that our evidence with respect to the capital

costs of nuclear, the discount rate for nuclear, and the

capital costs and commodity costs for combined cycle gas

turbines to meet base-load requirements, they're all

addressed in Exhibit D-3-1.

So this is the panel to receive and deal with those

issues.

MR. POCH: Madam Chair, let me interrupt my friend just

to get some clarification there. I certainly didn't have the

understanding that this is the panel we were to cross-

examine about nuclear costs. I had understood the earlier

comment that this is the panel that is going to talk about

the methodology by which you find crossover points, for

example. But that if I want to ask you about, you know,

nuclear capital cost overruns, that's for the nuclear panel.


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Am I wrong about that? Because if I am wrong about

that, from what Mr. Vegh just says, I think probably a

number of us have a problem.

MR. VEGH: Well...

MR. POCH: I am not sure what is left to talk about

nuclear. You know, because, of course, that crossover is

affected by the assumptions about nuclear performance, about

nuclear costs, about nuclear -- all of those things.

I am not -- quite frankly at a loss to imagine what is

left for the nuclear panel, then. I will let my friend

respond.

MR. VEGH: Sure. Well, as is set out for a -- while,

D-3-1, the evidence that sets the base-load requirement,

sets a base-load requirement by reference to a methodology.

The methodology bears the costs of nuclear and alternatives

to meet that requirement.

That methodology and the interrogatories that go to

methodology address capital costs, discount rates for

nuclear. That's where you find the evidence on nuclear, on

the costs of nuclear, is in D-3-1.

Then when you go to the evidence in D-6-1, it simply

adopts those costs. So D-6-1 doesn't give any information

on the costs of nuclear. It simply applies the findings

from D-3-1.

This is why I wanted to raise this issue now, because I

had more detailed conversations with some of the parties

than with others, but this is really a D-3-1 issue.

MR. POCH: We all understand, Madam Chair, that the


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tests that are being discussed here that the OPA used to

divide -- to define base load to decide, you know, where the

crossovers were, I fully understand that that's for this

panel.

But I saw Mr. Shepherd, at least, and others nod. I

don't think any of us thought that the inputs to that test,

per se, are for discussion here, although obviously we might

hypothesize, if this input changes this much, what happens

to the shift point.

But is my friend -- I really want my friend to be

clear, and then we can discuss what to do about it. Is Mr.

Vegh saying to you any questions we have about those inputs,

nuclear costs, nuclear performance, and so on, are for this

panel, then; or can we save those for the nuclear panel,

and, similarly, for gas and so on?

MR. VEGH: Madam Chair, I think an approach that makes

sense is, if we look at the non-renewable panel, it's the

same people.

MS. NOWINA: I did notice that, Mr. Vegh.

MR. VEGH: So I am not trying to make an issue where

there isn't one.

I would actually propose that this panel restrict

itself to methodology as much as possible, but the reality

is that's where the numbers are and that's where the

methodology does intersect. I think we could -- so the

approach is really to look at the base-load requirements by

reference to methodology. The methodology has assumptions.

You change the assumptions; you change the base-load


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requirements of the plan.

Madam Chair, what I propose is people address what they

can from D-3-1, and I will leave it to your good guidance to

ensure that parties are not sort of taking two shots at

cross-examining on the same issue. We know it is an

important issue, so we will get a thorough cross-examination

here.

So what I propose is that in fact with this panel,

people take a methodological approach, recognizing that this

is where the information is. So if you want to go into the

numbers, you can go into the numbers here, but this panel

will also be available to address the nuclear for base-load

issues in D-6-1.

So I am just warning at the outset that distinction may

not be always possible to keep, but I trust you to just

manage it as a matter of fairness, as well.

MS. NOWINA: Mr. Shepherd, did you have any thoughts on

this?

MR. SHEPHERD: Madam Chair, I have no questions on

nuclear costs for the reference forecast and reserve

requirement panel. I will have lots for the non-renewable

supply panel. So I can make the distinction, but my

distinction would be I will ask the questions when we get to

the supply option. I have none prepared today.

MS. NOWINA: So given that, Mr. Vegh, are you

comfortable with - there are a number of the same people

still before us - Mr. Shepherd asking those questions at the

time that panel comes up?


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MR. VEGH: As I say, I trust you to run a fair process,

so that -- I think that is fair. I think that is fair to

the parties, and that's why I wanted to alert them to this

now.

It's just that when we get to the non-renewable

resources, we will just be doing some back and forth between

D-3-1 and D-6-1. I think at this stage we will sort of see

how it goes.

MS. NOWINA: Mr. Shepherd will be our experiment.

MR. SHEPHERD: Oh, joy.

MS. NOWINA: Anything else, Mr. Vegh?

MR. VEGH: Perhaps just to draw one more link between

D-3-1 and D-6-1, and this is pushing things into D-6-1, so I

think it is where the parties want to go, but I just thought

I would make it explicit, as well.

So in D-3-1 there is -- the reserve requirement panel

will be addressing: What are the base-load requirements?

But then parties should also be aware, as they get to

subsequent panels -- so if this panel tells you what the gap

is, what the base-load requirement is, and you want to

address, well, how is conservation contributing to that,

that could be addressed by the conservation panel, as well

as the nuclear for base-load panel in D-6-1, or if people

want to address how renewable supply can contribute to

meeting base-load requirements, that could be addressed both

in the renewable panel and in D-6-1.

The caution is that by the time we get to D-6-1, this

is going to be more of an issue for conservation than anyone


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else. The panel we have addressing D-6-1, these supply

resources people, will sort of take as a given that they've

applied the renewable resources to base load, they have

applied the conservation to meet the base-load requirements,

and at that stage you are looking at the incremental base-

load requirements, which are really nuclear power at that

stage.

So perhaps I am foreshadowing too much and making it a

bit too complicated, but there are a lot of moving parts in

this application, and they do hang together, so I wanted to

lay it out a little bit.

MS. NOWINA: I appreciate the attempt to be helpful,

and I am sure it was.

MR. VEGH: To someone. Now, with that, Madam Chair, I

would like to present the forecast and reserve requirement

panel for cross-examination.

MS. NOWINA: Thank you. Mr. Shepherd.

CROSS-EXAMINATION BY MR. SHEPHERD:

MR. SHEPHERD: Thank you, Madam Chair. And can you

hear me okay?

Mr. Buonaguro has allowed me to go first because I have

a commitment, and so I don't actually have the lead cross

and I am not going to be covering all of the bases. Rather,

I have some particular points I want to cover, so I will

just get to them hopefully, surgically.

I represent the School Energy Coalition, for those of

you who don't know me, and our interest in this proceeding

is the long-term viability of the plan. While we're


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interested in short-term rate implications, our primary

focus is the long term.

As I understand the approach you took on the load

forecast - let's start with load forecast - you started with

the CIMS model, which is your model, Mr. Bataille?

MR. BATAILLE: It's not mine, but, yes.

MR. SHEPHERD: And Dr. Jaccard. And that's a detailed

model of energy consumption and economic inputs; right?

It's a combined -- it's a binary model?

MR. BATAILLE: Yes. It is a technology simulation

model designed to simulate the energy using technology stock

moving forward in the future.

MR. SHEPHERD: At its essence, it aggregates end uses;

right?

MR. BATAILLE: It -- I would not say it aggregates.

There is a certain breakdown of end uses within the model,

and those end uses tend to be defined by the heterogeneity

of uses within given sectors, industrial -- various

industrial sectors, household, commercial, what have you.

MR. SHEPHERD: So in the old-style notion of bottom-up

versus top-down models, is it one, the other or both?

MR. BATAILLE: It began as a bottom-up model, but the

long-term plan has been to make it what we call a hybrid

model, so it combines the best of both worlds. It brings in

the macroeconomic realism and the market dynamics of the

top-down model, and the technological realism of the bottom-

up model, and you will know why both -- the advantages of

both are there.


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MR. SHEPHERD: Yes, I understand. Now, this has things

like, for example, price elasticity built right into the

model; right?

MR. BATAILLE: It does for final end use demands, but

that function was not used for this project.

MR. SHEPHERD: Oh. Well, then before I go on with the

model, how was price elasticity considered in this load

forecast, if it wasn't in the model?


MS. BUJA-BIJUNAS: We were provided with elasticities

by M.K. Jaccard & Associates. What I want to stress is that

the way it was described to us was that there were not --

actually, it's on. Can you hear me? Can you hear me now?

MR. SHEPHERD: Take the hand mike.

MS. BUJA-BIJUNAS: Can you hear me now?

MR. SHEPHERD: Yes.

MS. BUJA-BIJUNAS: Okay, thank you. We received

elasticities from M.K. Jaccard & Associates and those

elasticities are actually in the evidence, in D-1-1. The

way it was described to us was that there are no explicit

elasticities that are put into the model that was used for

us. But rather, one can indirectly extract elasticities

through the model runs.

In other words, if you do a model run and then you --

with one set of prices, and then you shock the model with

another set of prices, you can, from that, calculate out

what the net impact is due to that price change which is a

way of getting at elasticities. But there isn't a set of


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elasticities that is, you know, hard-wired or put in as

assumptions into the model. It comes out of the model.

MR. SHEPHERD: Sorry, I wasn't actually asking about

the technical aspect of elasticities, i.e., the relationship

between price and load. I was asking whether the model

itself adjusts to price, that is, you put in price

assumptions and it changes the load result; right?

MR. BATAILLE: Yes.

MR. SHEPHERD: And there's a built in elasticity

assumption that does that; right?

MR. BATAILLE: Okay. Just to make a point of

clarification. I didn't hear you correctly here. I was

thinking the final end-good elasticity. And I didn't

realize you were talking about energy elasticities.

What the model does is it evolves the technology stock

through time, okay. There is a suite -- you start out with

a given set of technologies in the model in a base year,

then moving forward through time that gradually retires and

amortizes and we have to replace that in order to meet given

demand, okay. And the replacement algorithms are designed

to mimic firm and consumer investment behaviour as

accurately as possible.

So what happens is as energy prices change, you get a

different capital stock profile evolving through time and

effectively you get, as say natural gas prices change,

electricity prices changes, you will get a differing

electricity or natural gas demand.

But it doesn't need -- it doesn't operate on


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elasticities. It operates on the evolution of the capital

stock, in response to factor input prices.

MR. SHEPHERD: If input prices are higher, the effect

is that you will get a different technology mix because

people will be willing to spend more for an efficient

technology? So it can pass thresholds, for example, that

wouldn't be cost-effective at a lower price.

MR. BATAILLE: It does that with all -- inputs relevant

to the energies and capital stock. So capital, the various

forms of energy, emissions -- and emissions, the various

efficiency, CO2, what have you.

MR. SHEPHERD: Now, there is a set of inputs you have

to determine when you run a model; right? And there are

default inputs for price, for economic indicators, et

cetera, there are defaults and then you can choose which you

want for various things; correct?

MR. BATAILLE: Yes. Any model is an assembly of input

assumptions.

MR. SHEPHERD: And do we have somewhere in the evidence

a statement of the choices that were made for all of those

inputs for this, the model run is that is the basis for the

reference forecast?

MS. BUJA-BIJUNAS: It's in a few locations. The main

location actually is in D-4-1, attachment 6. D-4-1,

attachment 6 gives the report written by Mark Jaccard &

Associates detailing how they produced the reference

forecast and the energy efficiency-conservation potential.

It lists how the model, the various industries, it


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lists the drivers, in terms of price. It lists the physical

unit drivers in terms of households and parameters like

that.

MR. SHEPHERD: Okay.

MS. BUJA-BIJUNAS: The other area where you could find

information is in response to interrogatory - I can't

remember exactly which one it is. I will have to look it up

- where we actually provide all of the stock information,

the penetrations of technologies, specifically which

technologies are present in the base year and throughout the

forecast.

It is definitely in an interrogatory and I can't

remember what it is.

MS. FRECKER: It is in the GEC interrogatory. I can't

recall the specific number.

MR. SHEPHERD: We will track it down. Thank you. Now,

if I understand correctly -- those are the places where you

have the inputs, right, so all of the inputs are in one of

those two places? You don't have some additional inputs

that we don't know about?

MS. BUJA-BIJUNAS: All of the inputs and the outputs

should be in those locations and then the final tabulations

are also in D-1-1.

MR. SHEPHERD: Okay. Now, you didn't actually use the

CIMS output numbers themselves, you made an adjustment? And

if I understand what you did, you started with the CIMS

number for 2005, 143.1 terawatt-hours and then you compared

it to the actual for Ontario using the IESO numbers which


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was 155.0 and you said that the CIMS number is at the

generator --

MS. BUJA-BIJUNAS: No. CIMS is actually at the

customer.

MR. SHEPHERD: Sorry, at the customer.

MS. BUJA-BIJUNAS: Because it's looking at stock and

how customers use stock, so it's at that level.

MR. SHEPHERD: And the IESO number is at the other end

of the process and so the difference, 8.3 percent, you have

attributed to line losses?

MS. BUJA-BIJUNAS: It's a combination of a few items,

primarily line losses. That's the primary difference.

However, there are a few other smaller differences. CIMS

does not address, at least not for the analysis that was

done here, does not address agriculture so you still have a

bit of energy related to agriculture. It does not address

transportation. So there still a bit of energy in

transportation.

MR. SHEPHERD: Can I stop you for a second. CIMS has a

transportation module. Did you choose not to use it?

MS. BUJA-BIJUNAS: The version of CIMS that was run for

the national study and run for us did not have

transportation.

MR. SHEPHERD: I am just looking at the chart. The

energy demand model says it has modules for residential,

commercial, industry and transportation. Is that right?

MS. BUJA-BIJUNAS: The analysis that was done for us

addressed the major consumption areas of residential,


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commercial and industrial.

Agriculture currently uses about 2.3 terawatt-hours of

the 155, just as transportation uses about 0.7 terawatt-

hours of 155. And so I think the direction that was taken

was to account for the major users and just use an

adjustment factor that included T and D losses along with

the percentage for agriculture and transportation.

MR. SHEPHERD: Does that 8.3 percent include a weather,

a variation for weather or is weather consistent between the

IESO number and the model number?

MS. BUJA-BIJUNAS: What we do is when we compare or

when we calibrate the results, it is calibrated to the IESO

weather-corrected actual.

So our forecast starts on a weather-corrected basis,

and is forecast out into the future on a weather-normal

basis.

MR. SHEPHERD: You are jumping ahead of me. I am still

at 2005. The 143.1 number is already weather-corrected;

correct?

MS. BUJA-BIJUNAS: The analysis done at the consumer

level, because all of the information comes from -- not all

-- a majority of the information comes from NRCan, sources

like that. These sources do not do a weather correction.

So all of that information is not weather corrected.

Ultimately, when those results are calibrated, along

with T and D losses -- and along with line losses, et cetera

-- we try to have it equal the IESO weather- corrected

value.


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MR. SHEPHERD: So the answer to my question, then, is

that that 8.3 percent also adjusts for weather? Is that

right?

MS. BUJA-BIJUNAS: To a small extent. One thing I want

to stress is that the weather correction is certainly a lot

stronger an issue when you look at peak than when you look

at energy.

MR. SHEPHERD: I am going to come to that, yes.

MS. BUJA-BIJUNAS: So consequently, if you did not

weather-correct the energy, you wouldn't really see that

much of a difference as you would if you didn't weather-

correct for the peak analysis.

MR. SHEPHERD: Okay. Now, the CIMS model, the output

is terawatt-hours, it is energy demand; right?


MR. SHEPHERD: It doesn't have any peak or load shape

information in it.


MR. SHEPHERD: So then you had to, and you have an

exhibit where you talk about this, you had to convert the

CIMS data into peak demand data?


MR. SHEPHERD: And the reason for that is because when

you're doing capacity planning you need to know how much to

build.


MR. SHEPHERD: Okay. And so I am looking at Exhibit D,

tab 1, schedule 1, attachment 1, and this is your


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methodology for doing that; right?


MR. SHEPHERD: So I just want to ask you a couple of

questions about this. There were some things I didn't quite

understand.

You started by saying, We don't have good load profile

data for Ontario, but we can go to this company, Itron, in

the United States that has very sophisticated load profile

data by end use for Michigan and New York, and we can buy it

from them, right, and you did?

MS. BUJA-BIJUNAS: That was our starting point.

MR. SHEPHERD: Okay. And did you test those load

shapes to the Hydro One load shapes we already had available

to see whether they matched?

MS. BUJA-BIJUNAS: First of all, you couldn't really

compare the load shapes from Itron to Hydro One's load

shapes.

Hydro One did not go down to the same level of end uses

as we were going down to. So where we could compare was at

a more aggregate level; namely, we compared the residential,

the commercial and the industrial sector results.

For example, Hydro One does not have a profile for

dishwashers or refrigerators or any of the appliances. In

the CIMS analysis, you do have those appliances.

So we had to search out other load shapes for those

things that weren't covered by Hydro One.

So what we tried to do was we started off with the

Itron load shapes from jurisdictions that were relatively


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similar to Ontario; namely, places like Michigan or New

York. We used those as a starting point, and then we wanted

to check -- do our results, make some sort of inherent

sense.

So then we went to Hydro One, who at that point was in

the process of analyzing LDC information, and they provided

for us the profile of residential use, commercial and

industrial, on an hourly basis, and we were able to compare

our residential, commercial and industrial to look for

consistency to do a sanity check between the two.

MR. SHEPHERD: This is the combined load shape for

residential, not the end use by end use load shape?

MS. BUJA-BIJUNAS: Not the end use by end use. For

example, for the commercial sector, they don't do end uses

-- for the industrial sector, they don't do end uses.

So we did the commercial total, the industrial total,

and for residential, for example, they put together all of

their appliances as one end use as opposed to disaggregating

the end uses.

MR. SHEPHERD: Now, they actually have some specific

load profiles for end uses that you had Itron load profiles

for; right? Did you compare those ones head to head?

MS. BUJA-BIJUNAS: That would be --

MR. SHEPHERD: For example, lighting.

MS. BUJA-BIJUNAS: I am having difficulty remembering,

but we compared a couple of the end uses where there was

similarity. We concentrated more on the residential as a

total, commercial and industrial as a total.


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MR. SHEPHERD: All right. So if I understand what you

are saying, then, intuitively you thought that Michigan and

New York would be a good mix to proxy Ontario, and then you

tested it by going, at the best level you could, to the

Ontario data you had to see whether at least what you could

match did match?


MR. SHEPHERD: The answer is it did match?

MS. BUJA-BIJUNAS: It's relatively similar, yes. I say

"relatively similar" for the following reason. Hydro One

weather-corrects their information somewhat differently than

the way IESO weather-corrects. The logic is the same logic,

but ultimately you weather-correct either to minimize risk

for capacity planning or to minimize risk for revenue

collection, or whatever it is.

Hydro One's risk criterion is different than the

IESO's.

MR. SHEPHERD: It's revenue driven as opposed to --

MS. BUJA-BIJUNAS: That's exactly right. So we're not

going to have the same profiles, but ultimately you check to

see is your load forecast in the same vicinity. Do you have

similar characteristics? Are things explainable?

So from that perspective, we compared it, although on

an hourly-by-hourly basis it wouldn't be the same.

Hydro One, their peak in their analysis can occur on a

weekend. The IESO makes sure that the peak does not occur

on the weekend.

So there are some differences in the profiling.


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MR. SHEPHERD: Well, and those differences, in fact,

are material; right? You explained them. You understand

why they exist, but in fact the Hydro One load shapes don't

look at all like the Itron ones, do they? They're quite

different?

MS. BUJA-BIJUNAS: I wouldn't actually say they're

quite different.

MR. SHEPHERD: Okay. In this D-1-1, attachment 1, you

refer to the Itron load profiles, and you say, By the way,

we can't show them to you.

Have you filed them somewhere in this proceeding? You

say at page 2, as to the Itron load profiles, they're

proprietary, so we can't show them to you.

MS. BUJA-BIJUNAS: Oh, well, when we procured the

Itron, we paid -- the Itron load shapes, we purchased them

from Itron and it's their load shapes. So we did the work

with -- it's like purchasing software.

So -- but what -- so, as I said -- and we used that as

the starting point of our analysis. So it is like getting a

Lego set. You start with something, and then you keep

iterating. You keep adding intelligence as you obtain

intelligence. If there's something else to check against,

we checked against the old Ontario Hydro profiles, which are

on the IESO website.

MR. SHEPHERD: This is the ones from way back?

MS. BUJA-BIJUNAS: Oh, yes, exactly. But at least it

is Ontario data. We checked against the DOE. They do some

modelling. They have some profiles. Certainly some


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profiles will not be the same, but things like lighting you

sort of imagine would have a similarity.

MR. SHEPHERD: I assume that you didn't just imagine.

You checked.

MS. BUJA-BIJUNAS: That's right. So in some things,

you make -- it's kind of a judgment call. You make some

changes in certain locations in the profile. You are

comfortable with some; not others. You talk to people at

the IESO or you talk to other people who are familiar with

the market. Do you expect this load factor to be the

following for this end use, or if people are familiar with

what the profile should be for a given industry, how do you

feel about this profile?

So it kind of just develops with time. You make

changes to it.

MR. SHEPHERD: Let me come back to my question on this

point.

You started with they're -- the whole basis of your

capacity forecast is the Itron load profiles?

MS. BUJA-BIJUNAS: That was the starting point.

MR. SHEPHERD: And you have declined to let this Board

see them; that's correct?

MS. BUJA-BIJUNAS: I am not sure what the benefit would

be to see the Itron load shapes, given that we did a number

of changes and adjustments, et cetera, after the fact.

So it is like giving -- I mean, it's like giving

somebody a set of Lego sets, Lego bricks.

MR. SHEPHERD: All right. So then you -- what I am


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concerned with is the -- your load forecast becomes a black

box if we can't see how you calculated it; right? However,

let's leave that aside for a second and go on to the next

point, which is you didn't actually use the Itron profiles

as they were.

You did two things to them; right? You normalized

them, and then you adjusted them. So tell us what those two

things were.

MS. BUJA-BIJUNAS: A load profile, the height or the

magnitude of it is determined by the energy for the end use.

So you have to normalize the profile so that you can

then -- that's your starting point. It is almost like it

has energy of one. Different jurisdictions who used that

end use at a different amount will have a different area

under the curve, a different amount of energy. So that's

what normalization means. You have to start with that

equalling one, and then you take the end use energy from

CIMS, apply that as the area under the curve, and that will

give the weighting of that end use.

MR. SHEPHERD: It doesn't change the shape. It just

changes the amplitude of the curve?

MS. BUJA-BIJUNAS: That's right. It's an amplitude

adjustment; that's right.

MR. SHEPHERD: The reason for that could be because of

different weather, and that's where you catch weather;

right?

MS. BUJA-BIJUNAS: Actually, they're weather-normal.

MR. SHEPHERD: No, but they're weather-normal for the


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jurisdiction, so if the weather is different here as in New

York, that would be captured in an amplitude difference; is

that right?

MS. BUJA-BIJUNAS: The curves as obtained are supposed

to be weather-normalized to take out the impact of weather.

MR. SHEPHERD: Okay. So you would have the same curve

in Florida that you would have in Ontario.

MS. BUJA-BIJUNAS: No. That's why you choose places

like New York and Michigan. Navigant Consultants did this

work for us and they sort of perused the areas where you can

get Itron load shapes and tried to find areas that had, you

know, economies and weather similar to us, that it had real

winters, that had real summers. Similar to what you would

have in Ontario as opposed to Arizona or someplace that has

a very different one.

The other adjustment you mentioned is adjusting for

differences in things like stat holidays in Ontario compared

to the United States.

MR. SHEPHERD: Okay. So when this -- your evidence

talks about, this adjustment being to "better reflect

Ontario patterns of electricity use" that's not because our

behavioural patterns are different, that's because we have

different holidays, for example.

MS. BUJA-BIJUNAS: Yes. When you get the profiles from

Itron, they're American, in terms of they have whatever

American stat holidays are in there as opposed to Canadian

stat holidays. So you can be off in your...

MR. SHEPHERD: What I am saying is this adjustment


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doesn't include things like, we like dishwashers more than

people in Michigan do.

MS. BUJA-BIJUNAS: If you use normalized profiles, so

that the area underneath is one, and if in Michigan you have

a lot more energy going to dishwashing, then they would have

a higher adjusted profile than we do, but the similarity

would be: If you assume people wash their dishes as 8

o'clock at night, you would have the same profile, people

wash their dishes as 8 o'clock at night. It is just how

much energy goes into it would be different.

MR. SHEPHERD: If I can simplify these two adjustments

then the normalization is an amplitude adjustment.

The second adjustment that Navigant did is actually a

shape adjustment; is that right? So, for example, you're

going to have more load on Columbus Day and less on Victoria

Day.

MS. BUJA-BIJUNAS: That's true, that's true, yes.

MR. SHEPHERD: Right, okay.

Then -- now, after those adjustments you have a set of

load profiles. Have you filed those in this evidence?

MS. BUJA-BIJUNAS: What we filed was our peak and our

energy values by end use whereupon you can then get your

load factors for each end use.

MR. SHEPHERD: So you didn't file your load shapes?

MS. BUJA-BIJUNAS: I am trying to remember. I don't

think so. I don't think so.

MR. SHEPHERD: Okay. Now, then once you had this set

of adjusted load shapes, you then used what you referred to


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in the evidence as the delta approach to build your end-use

capacity forecast; right? The peak demand forecast.


MR. SHEPHERD: And this is to counter the sum of the

parts problem in the analysis where the sum of the parts

won't necessarily add up to the total. It is a forest and

trees issue; right?

MS. BUJA-BIJUNAS: That's correct, yes.

MR. SHEPHERD: So to deal with that what you do is take

a base profile of the system as a whole, the overall system

load shape, and then you say, okay, now we know it is made

up of all of those things so if we adjust this component

part, that will adjust the total by this much, right, and

the shape?


MR. SHEPHERD: Okay. And so, for example, if something

like central air-conditioning load increases over time, you

will adjust the system profile, the base system profile for

those specific changes to central air-conditioning load

which may not have the same shape as the overall system

load.


MR. SHEPHERD: All right. So the adjustment isn't just

an amplitude adjustment, it is also a shape adjustment?


MR. SHEPHERD: Now, to do that, you start with the 2005

IESO system profile?



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MR. SHEPHERD: And you will agree with me that the

choice of the base system profile is critical, because, in

effect, you're saying that that base profile is the paradigm

for the next 20 years; right?


MR. SHEPHERD: So how did you choose 2005?

MS. BUJA-BIJUNAS: Basically it was a case of -- that

was the latest year that was available. We went to the IESO

and asked them if they felt 2005 would be a reasonable

representative year, and basically they said it would be

fine.

They cautioned us not to use a year like 2003, for

example, which had things like the blackout and had numerous

strikes and it had all sort of other issues where they felt

the profile was not a representative profile, and so we

chose 2005.

MR. SHEPHERD: Now, you didn't do any analysis to

determine whether 2005 was, in fact, an appropriate

paradigm; right? You didn't look at an average of a series

of years and say, this looks like this at the mean?

MS. BUJA-BIJUNAS: No. We just -- there was no

indication given to us that 2005 was an outlier year, so we

just used 2005.

MR. SHEPHERD: What I am asking is, what investigation

did you do to see whether it was an outlier year, aside from

asking the IESO, What do you think?

MS. BUJA-BIJUNAS: All we did we asked the IESO if this

was an appropriate year to choose.


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MR. SHEPHERD: Now, when you're doing that, when you

are trying to create a paradigm, the other way you can do

this and people do this in the delta approach, right is they

create a composite year, it's made up of inputs from more

than one year. That's quite common, isn't it?

MS. BUJA-BIJUNAS: I can't answer to whether or not

that is common. I don't know. I guess it would be an

approach, but I don't know.

MR. SHEPHERD: Okay.

You will agree that if 2005 was an atypical year, then

your load forecast would be pretty fundamentally flawed?

MS. BUJA-BIJUNAS: I don't know how to answer the

question it is fundamentally flawed, because I don't know

how much of an impact that would be. There are a number of

things that affect a load forecast. There are a number of

other factors which, quite frankly, might outweigh how

different that is. So I cannot, in an absolute sense, say

that would be the Achilles heel of the entire analysis.

MR. SHEPHERD: Let me put it to you in perhaps a less

charged way.

If you had, by accident, used 2003, you would agree

that you wouldn't really want to rely on that load forecast.

MS. BUJA-BIJUNAS: In actual fact, at one point, we did

start looking at 2003. And we found because of the blackout

and strikes that it was a very difficult year to use and it

was at that point that we were told 2005 would be a better

alternative and so that's why we returned to it.

MR. SHEPHERD: Good. Now the other key result of using


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a delta approach is that your 20-year forecast is, starts

with an assumption that the end uses in that year will be

the same end uses for the next 20 years; right? They may

evolve, but what we use electricity for in 2027 is going to

be same as in 2005?

MS. BUJA-BIJUNAS: Well, the delta approach – it's

actually not the delta approach. It's the, what you use to

do your end-use forecasting. Because ultimately what you

add on to your profile is whatever end uses that you

analyze, which is what you analyze on the energy end of

things.

MR. SHEPHERD: In the CIMS model?

MS. BUJA-BIJUNAS: That's right. So, you know, the

delta approach is the translation by end use into, you know,

the A 760 hours of the year. But it translates what

analysis you have as an energy analysis.

So if those end uses are the same in your energy

analysis, they will be the end uses that you apply to the

other analysis.

MR. SHEPHERD: And in fact, the way you did it, the

CIMS model didn't provide you with any new end uses that

aren't -- that didn't exist in 2005; right? Electric cars,

for example.

MR. BATAILLE: Can you repeat the question, please.

MR. SHEPHERD: Yes. The output from CIMS doesn't make

any assumptions over the next 20 years that there will be

new electricity end uses having a material impact. True?

MR. BATAILLE: In certain components of the model --


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sorry, speaking specifically to residential and plug-load,

there is some assumption, there is quite a strong trend to

there being new plug-mode appliances and there's questions

of how fast or efficiency of the existing appliances is

increasing and how fast the efficiency of new appliances

will increase, but there is some assumption that things will

come along that we don't know about such as personal

computers at home. But it is looking at past trends, trying

to make some prediction of how that might occur.

MR. SHEPHERD: So you don't have any assumptions in the

model as to paradigm shifts in energy use?

MR. BATAILLE: No. Because of the model is a short to

medium term specifically, especially for this analysis of

defining that, there is some weight to the energy system as

it is carrying forward, and you are not going to see too

large a change within the forecast horizon.

MR. SHEPHERD: Short to medium includes 20 years, I

assume?

MR. BATAILLE: Yes.

MR. SHEPHERD: That sounds pretty long term to me, but

maybe for a modeller it is not.

You will agree, won't you, that there are new loads

that we can identify right now that have a reasonable

likelihood of happening that could have a material impact on

your load forecast, will you agree with that, like electric

cars, for example?

MS. BUJA-BIJUNAS: Certain technologies, like electric

vehicles, we're monitoring. We recognize they could have


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quite a significant impact on the load.

We also recognize there's certain technologies that can

decrease load, also. So we recognize there are some

technologies that have not been incorporated in the load

forecast, and some will increase it, like electric vehicles,

and some can decrease it, also.

MR. SHEPHERD: Well, in the case of some of those

technologies, at least - and I will again pick on electric

vehicles, but there's lots - they in fact may increase your

energy side, but not your peak demand side; right? In fact,

they may flatten your load shape.

MS. BUJA-BIJUNAS: Electric vehicles, if they are

charged overnight and use those eight hours to do their

recharging, that would not add to your peak. It would add

to your base load.

If the paradigm for electric vehicles is to have real-

time charging, as some jurisdictions are considering in the

States, that would change the picture. But a lot depends on

what your battery technology is and what your range is, and

that's really evolving a great deal right now.

MR. SHEPHERD: One of the things you're doing on the

conservation side is to move load from peak to off peak;

right? That's one of your strategies?

MS. BUJA-BIJUNAS: That's load shifting; correct.

MR. SHEPHERD: Because it is cheaper to run the system.

The overall cost of the system is cheaper if the flatten the

load shape; right?



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MR. SHEPHERD: And the other way you can do is you can

add load off peak, and that also flatten the load shape?

MS. BUJA-BIJUNAS: That would flatten the load shape.

MR. SHEPHERD: Okay. In your forecasting, you haven't

assumed any significant changes in that, have you?

MS. BUJA-BIJUNAS: We haven't assumed things like

electric vehicles or anything like that, no.

MR. SHEPHERD: The other part of this particular subset

is the question of -- you talked about the impact of price

changes on the CIMS model, but that is an energy impact.

Price changes can also affect wind energy as used;

right? We have imminently time of use pricing in smart

meters. Presumably that will shift load; right? How have

you modelled that in this?

MS. BUJA-BIJUNAS: That's actually in the CDM analysis,

and in the CDM analysis, which will be discussed in the

panel on CDM, we do incorporate an assessment for the impact

of smart meters for mass market DR programs and for business

market DR programs, all of them to shift load off peak.

MR. SHEPHERD: Okay. But I am not asking about

programs now. I am talking about the price response, the

-- sorry, the demand response associated with price changes.

Your model has assumptions about price changes, and I

am asking: How do you model the change in load shape that

results from price changes?

MS. BUJA-BIJUNAS: Again, what we did, for example, for

DR programs or for smart meter programs, for that matter,

what we did was that we had -- for example, say you're doing


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smart meters. This is the work Navigant did for us.

You have, say, the residential profile. You have

elasticities. They're not own price elasticities. They're

not those elasticities, but they're elasticities that

represent load shifting.

So they use those elasticities and the roughly three-

to-one price schedule to then determine what the profile

difference is going to be, and that is incorporated in the

CDM numbers.

So the CDM profile that we use does have profile

changes brought about by load shifting, and that new

profile, which has shifting in it, is subtracted from the

reference forecast to then give you the net demand.

So that sort of shifting is incorporated in the net

demand profile that's used.

MR. SHEPHERD: Okay. I am not actually asking about

either shifting or programs. I am asking about -- let me

back up a stage. Maybe I didn't ask the setup question that

we're into.

The plan and the forecast are iterative; right? If the

plan produces higher costs -- produces higher cost

electricity, that will change your forecast; right?

MS. BUJA-BIJUNAS: We actually did not do it in an

iterative fashion. The prices that were used for the

reference forecast were the ones that were used in the

national study that underlie the CIMS forecast.

So that was used to produce the reference forecast, and

that was also then used to produce the conservation


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potential forecast. Another set of runs afterwards was not

done.

MR. SHEPHERD: Natural conservation is supposed to be

in the load forecast; right?

MS. BUJA-BIJUNAS: It is.

MR. SHEPHERD: There is more natural conservation if

prices are higher; right?

MS. BUJA-BIJUNAS: That would be true.

MR. SHEPHERD: That's own price elasticity?

MS. BUJA-BIJUNAS: That's right.

MR. SHEPHERD: And so don't you need to know what the

cost is of the plan in order to determine how much you're

going to need, because it's going to affect your load;

right?

MS. BUJA-BIJUNAS: Yes. In one of the exhibits, in

D-1-1, which is Exhibit -- bear with me a minute. It's D-1-

1, page 24, figure 16.

In that figure, there are five curves. What we're

talking about right now, it is load 4 curves that we're

looking at. The yellow curve is the price assumptions that

underlie the CIMS analysis, that underlie the reference

forecast that was produced for us.

And the other three curves are cost to customer, so

they are the prices that come out from the plan.

What you will notice is that from roughly 2015 onward,

the price assumptions for the IPSP reference forecast is

contained within the band of cost to customer prices.

There is a deviation in the near term between the


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prices used in CIMS and the prices that come out of the

plan. The deviation is about 15 percent, or so.

Now, when you look at that, you could say, Well, the

prices used in CIMS are higher than the prices in cost to

customer. And so if the prices are higher, then you would

say, by using the lower prices, the forecast should then

have been higher than it actually was.

Well, I guess fortuitously, or whichever way you want

to look at it, I guess in the near term the economy has

certainly decreased so that if you were to take an

elasticity and apply that price difference, you would say

the forecast should be so many terawatt-hours higher.

At the same time, since all of this work was done, the

economy in the near term has gone down, and that would

dampen the forecast.

So you have one factor that would say this would

indicate a need for a higher forecast. In an economy that

has gone down, that would dampen it in the other direction.

So in the near term, there is a gap in the prices, in

the -- after 2015, there is no gap in the prices.

So I will say, yes, in the near term there is a price

difference between the planned prices and the CIMS prices,

but also in the near term. I think the current

circumstances are such that I think it would dampen any

increase in load.

MR. SHEPHERD: I was going to get to this later but I

will ask you now. Have you, in light of what has happened

over the last six months, have you updated your load


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forecast data?

MS. BUJA-BIJUNAS: I have a very long answer for that.

MR. SHEPHERD: That's fine.

MS. BUJA-BIJUNAS: Okay. Just bear with me.

MR. SHEPHERD: You can just give us a spreadsheet, if

you want.

MS. BUJA-BIJUNAS: I'm not that sophisticated. It came

through in the presentations that took place the first day

of this hearing.

What came through was that the 2006 and 2007 values as

measured by the IESO are significantly lower than the

reference forecast.

MR. SHEPHERD: Yes.

MS. BUJA-BIJUNAS: And there was a chart that we gave

in that presentation and you could see those two data

points. Oh, I think it's chart -- on page 50, is it 50?

MS. LEA: Yes, slide 50.

MS. NOWINA: Slide 50 of Exhibit K1.1.

MS. BUJA-BIJUNAS: There you go, okay. That's it.

So the two dots, the purple dots on the bottom, are the

actuals, the weather-corrected actuals from the IESO.

And the black line is the reference forecast. And the

red or orange triangles are the net of CDM numbers.

So if I look at for example 2007, the gap between the

reference forecast and the IESO actual is about 1,400

megawatts. Okay.

Now, that gap arises from two things, which is: How

much are we off on the reference forecast? And how much do


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we actually accomplish, in terms of CDM? Because what you

actually measure out there is the demand in a world where

there's conservation out there.

So you will never really measure reference forecast

again because your world has been changed, there is

conservation out there. IESO measures the net amount.

So that's the figure that's 1,400 megawatts, less than

our reference forecast.

So from that, if you want to sort of account for what

happened, you have to make some assumptions. A starting

point is, well, do we know anything regarding what happened

to conservation, because that certainly is part of the

equation. And at this point, we don't have a finalized

answer for how much conservation took place in 2007.

The CICA report from Peter Love lists about 600

megawatts, and the 600 megawatts are basically contracted

megawatts. They may not necessarily fall exactly on peak.

They may not necessarily give you the whole 600.

MR. SHEPHERD: They're not fully measured and

evaluated.

MS. BUJA-BIJUNAS: That's right, they're not fully

measured and evaluated and the OPA relies heavily on fully

vetting exactly what happened.

And so if we assume 400 megawatts of that actually

occurred as OPA-sponsored programs, you compare that to our

assumptions in the IPSP, and our assumption for 2007 is that

that sort of filled in area under the curve is 755

megawatts. Okay.


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It's 400 that looks like it will come up from the EMV

process, but it's not finalized yet, but that's for the OPA

efforts. There is also recognized efforts that are not OPA-

sponsored efforts. There is other influenced. And that

leaves around 300 or so for other influence, which we feel

probably is a good assumption.

So if, as a starting point to this exercise, if you

assume that we meet the 755 megawatts of conservation for

2007, if you make that assumption, then there is a 1,400

megawatt gap.

You assume the 755 is there for conservation. That

leaves, then, your reference forecast being high by about

700 megawatts. Okay. Again, this is very -- conjecture on

my part, but that is where you would lead this thought

process.

Now, the next step ends up being, okay, if your

reference forecast is 700, if the actual coming in is 700

lower than your reference forecast, what happened?

Again, a lot of the data is not there. The very

detailed data you need to do that, industry by industry, all

of those fine detail is available from NRCan.

Unfortunately, their last year is 2005, meaning they're

about two years, usually, and trying to catch up so you

can't get all of the detail you want.

So we went to the IESO. They don't have the

disaggregate information that we need. Like they don't have

all of the detail you want to be able to at an end-use level

come to a really complete solution.


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However, I think there's no denying that there are

certain industries in this province that have been suffering

quite significantly over this period. And from what we

could get from the IESO, there has been enough downturn in

the industrial sector to account for a large portion of that

700 megawatts.

So I think it is a feasible scenario to say that that

difference could come about from 755 megawatts of

conservation and a downturn in our industrial sector, in

particular pulp and paper. That can account for the other

difference of why there is such a difference between the

measured and what we planned on for 2007.

MR. SHEPHERD: So you are right, that was a long

answer.

MS. BUJA-BIJUNAS: I'm sorry. There are many parts to

this.

MR. SHEPHERD: That's okay, I asked for it.

As a forecaster -- first of all, my actual question was

and I will come back to my actual question, which is: Have

you done a new forecast?

MS. BUJA-BIJUNAS: Oh, okay. Well, there's a part B to

this then.

MR. SHEPHERD: Give me the yes/no answer, first.

MS. BUJA-BIJUNAS: No.

MR. SHEPHERD: Thank you. And then --

MS. NOWINA: You can give an explanation if you want.

MR. SHEPHERD: You can explain too.

MS. BUJA-BIJUNAS: I was always told to be direct so


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not doing a long explanation -- I have to be direct now.

We did not do a detailed subsequent forecast, in terms

of running CIMS again or doing that detailed analysis.

What we did do was we did, again, very top-level

thought processes, if you want to call it that.

When we looked at 2007 and the IESO information, which

said pulp and paper has been hurting quite a bit, the auto

industry has been hurting quite a bit, the chemical industry

has been hurting quite a bit, what we did was that we then

posited what might happen to these industries in the future.

MR. SHEPHERD: This is a scenario analysis as opposed

to a --

MS. BUJA-BIJUNAS: Yes, yes. And we said, okay, what

if this decreased load doesn't revive? It stays that way

for these industries out into the future, to the end of the

forecast.

MR. SHEPHERD: That's the key thing in long-term

forecasting, right, is you have to assess whether a short

term impact is going to continue, or whether it is just --

MS. BUJA-BIJUNAS: That's exactly right. That's

exactly right. So we're just talking here about these

industries and what might happen to them.

You mentioned earlier there is other factors, electric

vehicles, there is other factors that might bring it down.

There is many different things that create many different

scenarios. So at this point we're just saying, okay, what

about the issue of the manufacturing sector? How would that

affect load in the future?


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Again, it is just scenarios. If they stayed at the

current level for the next 20 years, if they didn't revive.

What if they revived halfway up to what we thought was going

to be the case for them in the 20 years? Or what if they do

resume what we thought they would get up to, but it might be

ten years out so they have a slow ramp back up to where they

were before?

What we found that in most of these scenarios that the

low band that we posited covers that eventuality in the mid-

term. It doesn't cover it in the very, very short term. We

can see in the graph it doesn't, and a lot of it is because

bands get wider with time. They're not wide in the very

first year.

So our bands don't capture that in the short term.

They are okay in the mid-term.

The supply case, which is the load demand case, is a

bit higher than this -- these scenarios after 2020.

So once you get further out, then, again, just using

the scenario of lower industrial demand, if it continued on

from what's happening now, that's a big assumption. If you

assumed it's continuing on from what's happening now, in the

long run, then they would be within the band, except for

when you get to about 2020.

But as I said, the issue there is you're now looking at

one variable, which is the manufacturing sector. What's the

other variable? What if things like off-carbon technologies

cause the load to go up? That's the other variable. That

also adds to uncertainty.


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So you've got uncertainty in your manufacturing sector,

uncertainty in your economy, uncertainty in new

technologies, some which will push up and some which will

push down, and that's what I meant in my initial

presentation. This is really a time of really, really great

uncertainty.

MR. SHEPHERD: Okay. Thank you. Madam Chair, a time

check. I am just on my 60 minutes. I have about ten

minutes left, if that is okay with the Board.

MS. NOWINA: I say you have six minutes left. I might

give you the extra four, Mr. Shepherd.

MR. SHEPHERD: Thank you. I am trying. My last set of

questions is with respect to disaggregation of your

forecast. I provided you and others with a spreadsheet.

The OPA witnesses will find that I like to use spreadsheets,

for some reason that's back in my distant past. This is

entitled "Comparison of 20-Year Percentage Increases In

Reference Forecast".

Do you have that?

MS. BUJA-BIJUNAS: Yes, we do.

MR. SHEPHERD: Does the Panel have that?

MS. NOWINA: No.

MR. RICHMOND: No, the Panel does not have that, Mr.

Shepherd. Perhaps we could call that Exhibit K6.1. You

have characterized it as?

MR. SHEPHERD: "Comparison of 20-Year Percentage

Increases In Reference Forecast".

EXHIBIT NO. K6.1: DOCUMENT ENTITLED, "COMPARISON OF


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20-YEAR PERCENTAGE INCREASES IN REFERENCE FORECAST"

MR. SHEPHERD: Now, we provided you with the Excel

version of this. Have you had a chance to verify that your

data has been correctly replicated in this chart and that

the percentages are calculated correctly?

MS. BUJA-BIJUNAS: I have to admit, we got these sheets

at lunchtime and we haven't had a chance to go through all

of the data.

MR. SHEPHERD: You were not provided with the Excel

spreadsheet? We sent it yesterday and asked that it be

provided to you.

MS. BUJA-BIJUNAS: Actually, we just got it at

lunchtime.

MR. SHEPHERD: Oh, okay. So I wonder if you will

accept, subject to check --

MS. BUJA-BIJUNAS: That's fine. Subject to check,

that's fine.

MR. SHEPHERD: You understand what we did we took your

forecast data in Exhibit D, tab 1, schedule 1, attachment 2,

pages 3 to 8, and we just calculated percentages and totals

from it. Do you understand that?

And so it has two sections. The top part, which is the

end use sectoral detail, it has the coincident peak demand

for 2007 and 2027, and then on the right-hand side it has

the energy demand for those same periods with percentages.

Do you see that?

MS. BUJA-BIJUNAS: Yes.

MR. SHEPHERD: Now, the energy figures here, if we just


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look at the right-hand side, the energy demand side, these

are the energy figures you got from CIMS which you then

increased by 8.3 percent?


MR. SHEPHERD: And so would you agree that applying

that 8.3 percent to all of the figures is a shortcut,

because it's unlikely that it actually -- they actually all

adjust by 8.3 percent?

MS. BUJA-BIJUNAS: Yes, that is true.

MR. SHEPHERD: Okay. But you don't have more detailed

information on what the correct adjustment would be for

individual end uses? You have no way of determining that?

MS. BUJA-BIJUNAS: No. We consider it. The industrial

sector, for example, part of the industrial sector is made

up of large industrials, for example. They might just see

transmission losses as appropriate but not distribution

losses. Residential sector would potentially -- some of it

might have more of a distribution loss.

So it would vary, but we just applied the same

correction factor right across. So it's the same -- uniform

correction factor.

MR. SHEPHERD: So that's the right-hand six columns.

Then the left-hand six columns there, those are the numbers

you got by converting the CIMS data using this delta

approach with the load shapes to peak demand data; right?


MR. SHEPHERD: Okay. So I just want to ask a couple of

questions about this. Let's start with the residential


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section.

So if I read your data correctly, what you are

forecasting is that residential peak demand will go up by

about 25 percent over the course of the next 20 years, but

residential energy use will go up by 18 percent over that

period. Does that sound right to you?


MR. SHEPHERD: So doesn't that mean that the

residential load profile is going to alter over that period?

There will be a significant shift from off peak to peak?

Isn't that the effect of that data?

MS. BUJA-BIJUNAS: What that is signifying is that

those end uses that have a different peak-to-energy ratio,

that are peak year, are growing or contributing more in the

long run.

So, for example, end uses like air-conditioning, which

are quite peaky, if they figure more and more prominently,

they will result in a faster peak demand growth as opposed

to an energy growth.

MR. SHEPHERD: Well, it's interesting you say that,

because I am looking at the central air-conditioning line,

and it says the peak demand for central air-conditioning

will go up about 26 percent, but the energy will only go up

22-1/2 percent. That tells me - tell me whether I am

wrong - that the -- what you are anticipating is that people

will use their air-conditioners more in the daytime than

they do now?

MS. BUJA-BIJUNAS: No. Actually, if you -- how do I


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describe this? Okay. Suppose the current load profile for

the province was totally flat, okay, and it had only one

bump, the one air-conditioner that there is in the province,

and that was the only bump you had in your entire profile.

If you got two new air-conditioners in your entire --

for your entire forecast, those two bumps will -- it could

have the exact same profile, but you're having this peaky

profile add more to your overall profile.

MR. SHEPHERD: I am not asking you about --

MS. BUJA-BIJUNAS: So I am not assuming any load

shifting. I am just incorporating profiles, some which are

peakier than others, which will result in different peak

growth.

MR. SHEPHERD: That's not what I'm asking you, though.

I'm not asking you about how you compared the central air-

conditioner line to the residential line. You're right,

that's the result.

I am asking you, if you look at the central air-

conditioning line, you're saying that the peak demand for

central air-conditioning will grow faster than the energy

use for central air-conditioning.

MR. ADELAAR: One of the reasons you see that

phenomenon is you are getting a greater saturation or

penetration in the marketplace of central air-conditioning,

and that load is spread over both potentially over peak and

shoulder season. So the energy is potentially spread over a

longer period than -- so you will have a disproportionate

effect on peak, on summer peak, as you increase saturation


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of that central --

MR. SHEPHERD: So I still don't understand the math

there, I'm sorry. Help me out with this.

If you have -- whether you have one air-conditioner or

a million air-conditioners, if they all have the same load

shape, right -- if they all have the same load shape, then

the increase in capacity from one number to the other number

and the increase in energy are going to be identical, right,

in terms of percentage?

MR. ADELAAR: First of all, they're not necessarily all

going to have exactly the same load shape, because it's a

function of the behaviour of the households.

MR. SHEPHERD: Well -- and so that is what I am trying

to drive at. What is the assumption you made that caused

the energy in the demand -- the energy in the peak to move

at a different rate, because all other things being equal,

if we use air-conditioners the same as we use them today,

then we could have more air-conditioning, but the

relationship between the two should be the same; right?

MR. ADELAAR: I wouldn't suggest that based on our

analysis of central air-conditioning, electricity

intensities, that the relationship between energy and peak

will always be the same because of different patterns of

usage among households.

MR. SHEPHERD: So you are making an assumption that

over the next 20 years the pattern of usage is going to

change and we'll use air-conditioners more often during peak

than we do today?


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MR. ADELAAR: I wouldn't make that prediction. I would

defer that to my colleague.

MS. NOWINA: I am wondering, Mr. Shepherd, if it might

be more helpful to get an undertaking so the witnesses can

think about your basic question.

MR. SHEPHERD: I am going to have several of these, so

why don't I have a combined undertaking as I ask each one of

them, because there is like five or six of them.

MS. NOWINA: All right.

MR. SHEPHERD: Okay. So then let's move to another

line which is the miscellaneous line in residential. We are

still in residential but we're almost finished it.

In miscellaneous, the miscellaneous is home

entertainment and computers and things like that; right?

You have to speak.

MS. BUJA-BIJUNAS: Oh, yes.

MR. BATAILLE: Yes.

MR. SHEPHERD: And so naturally, you're expecting that

that is an area that's going to grow over time; right?

MR. BATAILLE: That's what the -- that's the trends we

see, yes.

MR. SHEPHERD: And you have also shown that the

increase in demand for that, sorry, I am using the old

terms.

The increase in peak for that is going to grow faster

than the increase for energy. I have the same question as I

had about air-conditioning: What's the behavioural pattern

change that produces that result? If you don't have an


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answer, I can wrap it up in the undertaking, okay.

The next area that I had a question about is, you have

assumed that commercial and institutional load shape will

stay roughly the same; right? The energy and demand will

grow at roughly the same rate? The amount of capacity and

the amount of energy you need is growing at roughly the same

rate?

MS. BUJA-BIJUNAS: I think so. Let me just check.

Roughly, yes.

MR. SHEPHERD: But if you go to industrial, again, you

are assuming that peak demand is going to grow faster than

energy use.

Do you know why that is? You have peak demand growing

at 31.6 percent and energy growing at 26.2 percent over the

20-year period.

MS. BUJA-BIJUNAS: It's the HVAC component that's

contributing to that.

MR. SHEPHERD: Okay.

MS. BUJA-BIJUNAS: Meaning, in an absolute sense, as

there is -– yes, as there is more HVAC and HVAC, for

example, is assumed to have more of a peakiness than machine

dry, for example, then that would lead to the difference in

peak growth versus energy growth.

MR. SHEPHERD: Okay. Let me cut to the chase here.

For your totals, you are expecting that peak demand

over the 20 years will grow by 28 percent, but energy demand

will grow by 25 percent.

Correct me if I'm wrong, but the effect of that is that


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you have to build more capacity than -- your capacity need

is higher than your energy growth as shown in CIMS; right?

MS. BUJA-BIJUNAS: The result we get is that over the

2007-2027 period, peak will grow at 0.1 percent more quickly

than energy.

So it grows a small percentage more than the energy

does.

MR. SHEPHERD: Okay. So what I am going to ask you to

do is, on these end use things, for the big changes -- I

have highlighted a couple of them -- can you give us an

undertaking to provide a brief explanation as to the changes

in energy -- in the electricity use that are driving those

changes in the growth of peak versus electricity?

MS. BUJA-BIJUNAS: Okay, okay.

MR. SHEPHERD: Can you do that?

MS. BUJA-BIJUNAS: Yes.

MS. LEA: Undertaking J6.2.

UNDERTAKING NO. J6.2: TO PROVIDE A BRIEF EXPLANATION

AS TO THE CHANGES IN THE ELECTRICITY USE THAT ARE

DRIVING CHANGES IN THE GROWTH OF PEAK VERSUS

ELECTRICITY

MR. VEGH: The way the -- I may regret this but the way

the interrogatory is expressed does leave a certain amount

of judgment, in terms of which particular ones will be we

will be addressing. I just want Mr. Shepherd --

MR. SHEPHERD: I will leave that to you.

MR. VEGH: You will leave that to us, thank you.

MR. SHEPHERD: Or to your witnesses, Mr. Vegh.


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MR. VEGH: The royal "us." You will leave it to the

OPA, thank you.

MS. NOWINA: Just to be clear. Your key concern, Mr.

Shepherd, was where peak demand was increasing but energy

demand was not increasing to the same -- at the same rate?

MR. SHEPHERD: That's right. The biggest disparities

are the ones I am concerned with. Obviously the ones that

have very small megawatt impacts even if the percentages are

different, I don't care.

So last is the regional reference forecast. I only

have a couple of questions on this.

You see the bottom section, it talks about the system

summer peak and the regional energy for the various regions.

This demonstrates that far and away the largest driver

of increased demand is the GTA area. That's more than half

your increase in demand; is that right?

MS. FRECKER: That is correct.

MR. SHEPHERD: That primarily flows out of the CIMS

model?

MS. FRECKER: The regional disaggregation of the

provincial forecast, which was provided to us by M.K.

Jaccard & Associates. The details of that disaggregation

methodology are given in D-4-1 --- rather, sorry, D-1-1 in

the same attachment as we have been discussing with respect

to the load profiles, and that disaggregation was carried

out by the OPA using an OPA methodology.

MR. SHEPHERD: Okay. So can you briefly tell us what

that methodology was.


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MS. FRECKER: Certainly. So the starting point was the

provincial forecast. And there were three main steps that

were involved in the regional disaggregation.

The first was disaggregating the province into

geographical zones which we have done to correspond to the

IESO electrical zones.

The second step was that we used proxy, economic,

demographic, and industrial data to disaggregate each of the

sectoral provincial forecasts. So for the residential

sector, we disaggregated the residential provincial forecast

on the basis of population, the population in those regions

existing and projected.

For the commercial provincial forecast, we

disaggregated that to the regions on the basis of an index

of commercial floor space and commercial employment.

For the industrial disaggregation of the provincial

forecast to the regions, we performed that disaggregation on

the bases of subsectoral industrial load growth patterns

that were identified in CIMS, and the disaggregation was

done on the basis of data that was provided to us in a

market scan done by Kinectrics which looked at the

industrial shares of industrial subsectoral load throughout

the province.

MR. SHEPHERD: Let me take the simplest of those to

make sure I understand it. Commercial floor space.

So what you did you said, okay, the CIMS model produces

X amount of load for commercial. And the total floor space

in the province is another number. So it's so much per


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square foot, and then you look at each of the regions and

say, okay, how many square feet do you have in each region?

MS. FRECKER: We didn't have commercial square footage

for each the regions. We did have a market scan that had an

indication of the commercial footage in the major regions.

MR. SHEPHERD: Conceptually though, that's correct?

MS. FRECKER: Conceptually, the proportion of regional

floor space was used to disaggregate the commercial forecast

as well as employment, commercial employment.

MR. SHEPHERD: I take it you agree that if the regional

forecasts are substantially different, for example, if the

northwest doesn't go down by 14 percent but instead goes up

by as much as the GTA, that results in substantial shifts

not only in where your generation is but also in what kind

of generation it would be; is that right?

MS. FRECKER: I think the particular implications of

demand being higher or lower than forecast on a regional

basis would probably be better addressed by our colleagues

on that side of the table.

MR. SHEPHERD: Mr. Stein or Mr. Gibbons, do you have a

brief answer to that, since I am over my time?

MR. GIBBONS: Could you repeat the question, please?

MR. SHEPHERD: The question is: If the regional load

is substantially different than what you projected - for

example, if the northwest has an increase instead of a

decrease - the effect of that is to change not only where

you put your generation, but also potentially what

generation you use; is that right?


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MR. GIBBONS: Potentially, yes.

MR. SHEPHERD: One other -- I have only one other

question, and that is the line for Bruce, I realize it's not

particularly material, but it's a big increase in peak.

I take it the reason for that is because you're

expecting new nuclear there and new nuclear has a load, as

well; is that right?

MS. FRECKER: I would have to check the particular

details of that for you.

MR. SHEPHERD: It was only curiosity. Those are all of

my questions. Thank you.

MS. NOWINA: Thank you, Mr. Shepherd. You were over by

about 17 percent of your allocated time.

MR. SHEPHERD: Can I pay it back later?

MS. NOWINA: Yes, you may, or you can get one of your

colleagues to pay it back and you can buy them a beer or

something like that.

MR. SHEPHERD: All right.

MR. DeROSE: For the right price, we could have a

proper trade in cross-examination time.

MS. NOWINA: Given where we are right now - it is 4:15

- I don't see a lot of point in starting with Mr. Buonaguro.

We will let him start fresh in the morning.

So we will conclude today and we will resume tomorrow

morning at 9 o'clock.

--- Whereupon hearing adjourned at 4:16 p.m.


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€¦ · web viewenergy. board. file no.: eb 2007-0707. volume: date: before: 6 september 16,...

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