volume 2 · 2006-08-24 · corporation, transalta corporation, and transcanada energy limited....

Allwest Reporting Ltd.1125 Howe StreetVancouver, B.C.

BRITISH COLUMBIA UTILITIES COMMISSION

IN THE MATTER OF THE UTILITIES COMMISSION ACTS.B.C. 1996, Chapter 473

In the matter of British Columbia Transmission Corporation

Network Economy and Open Access Transmission Tarriff

Vancouver, B.C.August 24th, 2006

PROCEDURAL CONFERENCE

BEFORE:

MS. L. O’HARA Panel Chair and Commissioner

Volume 2

APPEARANCES

P. MILLER COMMISSION COUNSEL P. FELDBERG BRITISH COLUMBIA TRANSMISSION

CORPORATION T. DALGLEISH ALBERTA COALITION N. BERGE TRANSCANADA ENERGY LIMITED D. SIMPSON ALBERTA ELECTRIC SYSTEM OPERATOR J CHRISTIAN B.C. HYDRO AND POWER AUTHORITY D.POTTS JOINT INDUSTRY ELECTRICITY STEERING COMMITTEE D. NEWLANDS ELK VALLEY COAL CORPORATION J. LOWE EPCOR UTLITIES INC. C. JOY ENMAX ENERGY CORPORATION

INDEX OF EXHIBITS

NO. DESCRIPTION PAGE VOLUME 2 - AUGUST 9, 2006

C7-11 B.C. HYDRO AND POWER AUTHORITY WORKSHOP POWERPOINT PRESENTATIONS ....................... 42

C8-7 ALBERTA COALITION WORKSHOP POWERPOINT PRESENTATION.................................... 42

BCTC Network Economy and OATT Hearing

August 24, 2006 Volume 2 Page: 44

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Computer Aided Archiving & Retrieval System

CAARS

VANCOUVER, B.C.

August 24, 2006

(PROCEEDINGS RESUMED AT 10:01 A.M.)

CHAIRPERSON: Please be seated. Good morning, ladies and

gentlemen. For the record, my name is Liisa O'Hara,

and welcome to this morning's proceeding to consider

the next steps in the Commission's review of the

application for network economy and open access

transmission tariff filed by BCTC on March 1st, 2006.

With me here representing Commission Staff

are Jim Fraser and Rob Gorter, whom you probably know

fairly well by now after the two workshops.

Commission Counsel for this proceeding will be Mr.

Paul Miller from Boughton Law Corporation. The

Hearing Officer is Mr. Hal Bemister.

This is a procedural conference number 2

that was first established by order G-50-06, which has

been filed as Exhibit A-5. After reviewing the

intervenor evidence and the letters of comment

following the first workshop, the Commission Panel

concluded that a later workshop held after the receipt

of responses to the information requests on intervenor

proposals might prove to be especially helpful in

assisting participants to assist the prospects for

some or all of the application to be resolved through



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a negotiated settlement process.

In the view of the Panel, the second

workshop would be most efficient and useful if held in

conjunction with a second procedural conference.

Accordingly by Order G-82-06, which has

been filed as Exhibit A-7, the regulatory timetable

was amended to schedule the Workshop No. 2 for

Wednesday, August 23rd, and this Procedural Conference

No. 2 for Thursday, August 24 which is today.

To set the stage for today's proceeding, I

wish to briefly just highlight the key milestones of

our process to date. First, the scope for this

proceeding was defined in the Commission letter dated

May 4, 2006 which was filed as a part of Exhibit A-5.

Workshop No. 2, facilitated by Commission Staff on

BCTC application was held on May 23rd, 2006. After a

round of IRs, intervenor evidence was filed by the

Alberta Coalition and B.C. Hydro on June 30th, 2006.

Members of the Alberta Coalition are ENMAX

Corporation, TransAlta Corporation, and TransCanada

Energy Limited. After a round of IRs on this

evidence, Workshop No. 2, again facilitated by

Commission Staff, was held yesterday in this same

room.

As next steps, our regulatory timetable has

set aside three days from September 6th to September



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8th, 2006 for a negotiated settlement process if deemed

necessary.

Proceeding Time 10:05 a.m. T02

It has also set Monday, September 11th, 2006

as a start date for an oral public hearing, if deemed

necessary.

In conclusion, the process steps taken to

date have brought us to this decision point, number

two, which means that the moment of truth has arrived.

We now have this morning, we have to arrive at an

effective plan to bring this review process to a

conclusion. Our key choices seem to be a partial or

total negotiated settlement process, a written hearing

process, or an oral hearing process.

After entering the appearance, I will ask

you to address the following agenda items -- one issue

at a time, in the following order. Number one,

process steps to complete the review of the

application. Number two, regulatory timetable. And

number three, any other matters that will assist the

Commission to efficiently review all aspects of the

application and render a timely decision. Following

this procedural conference, the panel expects to issue

an Order establishing the regulatory process and

timetable to conclude this review.

And I will now ask Mr. Miller to call for



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appearances. At the same time you are entering your

appearances, should you have any additional issues

that you wish to add to the agenda for consideration

this morning, please identify those as well.

With this, please proceed, Mr. Miller.

MR. MILLER: British Columbia Transmission Corporation.

MR. FELDBERG: Peter Feldberg, Commissioner O'Hara,

appearing for BCTC.

THE CHAIRPERSON: Thank you.

MR. MILLER: The Alberta Coalition.

MR. DALGLEISH: Good morning. Terry Dalgleish for the

Alberta Coalition.

MR. MILLER: TransCanada Energy Limited.

MS. BERG: Good morning. Nadine Berg, counsel for

TransCanada Energy. My predecessor, Jennifer Nichols,

had registered as counsel for TransCanada and I would

request that the record be changed to show that I am

counsel for TransCanada now. However, TransCanada is

part of the Alberta Coalition, and Mr. Dalgleish will

be making all submissions on behalf of the Alberta

Coalition.

THE CHAIRPERSON: Thank you, Ms. Berg.

MR. MILLER: Alberta Electric System Operator.

MR. SIMPSON: Good morning, I'm Doug Simpson,

representing the Alberta Electric System Operator.

MR. MILLER: British Columbia Hydro and Power Authority.



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MR. CHRISTIAN: Good morning. Jeff Christian for B.C.

Hydro. I believe that the issues that I'd like to

speak to are covered by the three topics you raised,

but it's not entirely certain so, to avoid any

surprises, I'd just like to mention a few other things

that I'd like to speak about today.

THE CHAIRPERSON: That's fine.

MR. CHRISTIAN: First is some Information Requests that

were put by B.C. Hydro to the Alberta Coalition that

were not answered by the Alberta Coalition -- were the

subject of a letter written by B.C. Hydro, I believe,

on August 11th. I'll have a few comments to make on

that.


Another issue that I'd like to address is

the weekly reports that BCTC has been producing for

some time now. Only some of them are on the record

and I'd like to make a submission with respect to the

balance of those weekly reports and how they're

incorporated into the record. And I will also have

some comments with respect to the briefing schedule of

written argument and the order of panels, if there is

an oral phase to this hearing.

THE CHAIRPERSON: Thank you, Mr. Christian.

MR. MILLER: The Joint Industry Electricity Steering

Committee.



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MR. POTTS: Dan Potts appearing on behalf of the Joint

Industry Electricity Steering Committee. I have no

comments on the agenda other than under "Other

Matters" I would like to briefly address the issue of

the customer interest in this proceeding, if that's

acceptable. Thank you.


MR. MILLER: Willis Energy Limited. No appearance. Is

there any party that I've missed that wishes to

appear?

MR. LOWE: John Lowe for EPCOR. Thank you.


MR. JOY: Good morning. Chris Joy for ENMAX. Terry

Dalgleish will be making submissions on our behalf.

Thank you.

MR. MILLER: I believe that concludes the order of

appearances, Madam Chair.

There is one procedural matter that I'd

like to address, with your leave, and that's regarding

the marking of the workshop PowerPoint presentations

from yesterday. I've spoken to counsel for B.C. Hydro

and the Alberta Coalition and they have consented to

filing the PowerPoint presentations as exhibits. So

the B.C. Hydro and Power Authority Workshop PowerPoint

would be marked as Exhibit C7-11.

THE HEARING OFFICER: Marked Exhibit C7-11.



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(B.C. HYDRO AND POWER AUTHORITY WORKSHOP POWERPOINT

PRESENTATIONS MARKED EXHIBIT C7-11)

MR. MILLER: And the Alberta Coalition Workshop

PowerPoint presentation would be marked as Exhibit C8-

7.

THE HEARING OFFICER: Marked Exhibit C8-7.

(ALBERTA COALITION WORKSHOP POWERPOINT PRESENTATION

MARKED EXHIBIT C8-7)

MR. MILLER: That concludes the procedural matters for my

part.

THE CHAIRPERSON: Thank you, Mr. Miller.

Now then we're turning to the first agenda

item, which is process steps to complete the review of

the application. We will first hear from the

applicant and then from the intervenors in the order

of appearances. So Mr. Feldberg please.

MR. FELDBERG: Thank you, Commissioner O'Hara.

I've written down a couple of headings, I

suppose, under process issues. The first one I wrote

down was whether or not to preserve the dates for the

negotiated settlement process which are currently set

for September 6th to 8th. The second issue that I wrote

down was what that means for the start of the oral

phase of the proceeding. The third issue is whether

or not we have an oral or written phase to conclude

the process. And the next one I had was timing for



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filing of direct evidence and rebuttal evidence if

necessary, and that could be dealt with under your

agenda item 2 but I probably will comment a little bit

about it now. I just wanted to make sure we had a

place marker for that.

And I think that's primarily what I have to

address on process. I note that my friend Mr.

Christian has some comments to make on a couple of

other issues. He mentioned the timing of panels et

cetera, but I think I'll wait to hear what he has to

say before I comment on any of that.

The first issue is whether or not we should

have an NSP process. There's been some discussions

among the parties and counsel as to whether or not

that looks like it would be a useful thing to

preserve, and my sense, Commissioner O'Hara, is that

the consensus is that we should preserve that time,

that there is a prospect that some, if not all of the

issues, could be resolved through that process. It's

early to tell and I think my friends will be able to

say more about where they are in that process as well,

but I know that there are some informal discussions

that have taken place to get the ball rolling so to

speak.

So I think the only comment that I'd make

at this point on the negotiated settlement process is



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that we should preserve the dates and we should assume

that that process will take place.

Where that takes me next


Where that takes me next, and perhaps this

is a scheduling issue more than it is a procedural

steps issue, but my sense is that makes the timing of

the negotiated settlement process and a hearing that

is, while confined, quite complex, as this one is,

there's very little time -- effectively, a weekend --

between the end of the negotiated settlement process

and the commencement of the oral process.

And there's two things that generally

happen with a negotiated settlement process, or

negotiations and hearing. It is somewhat difficult to

do -- to prepare for both at precisely the same time.

There's a dynamic of shifting from one mode to the

other, and there is some practical difficulty,

assuming that the negotiations took all of the time

that they're allotted to take, in translating the

product of that negotiated settlement process into the

commencement of an oral process, effectively the next

day, if you ignore weekends.

And so I think I can deal with this in

terms of scheduling, but my submission would be that

it would be more practical to provide for a period of



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time between the negotiated settlement process and the

start of the oral phase, and I'm not talking about a

long period of time, I'm thinking a week, two weeks.

You know, just something that enables the parties to

collect themselves after the negotiated settlement

process and to get themselves and the Commission in

shape for the hearing itself. That's what I'm

thinking in terms of timing. And I'll wait to hear my

friends' comments on that before I address the

scheduling issue associated with that.

The next issue that I had, I think, was

whether or not there should be an oral or a written

phase, and I've given this a significant amount of

thought, Commissioner O'Hara, because as you may

recall in the initial procedural conference, I wasn't

sure which was appropriate for this application,

whether it was written or oral. We've now had the

opportunity, of course, to see the evidence that has

been filed, and we have seen the information responses

that have come back, and in my submission, this

proceeding calls -- still calls for, at least at this

stage, prior to the negotiated settlement process

conclusion, it calls for an oral phase.

And the reasons for that, in my submission,

are that the issues involved are complex, there's a

certain amount of expert evidence -- a fair amount of



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expert evidence. And that many of the arguments

raised and the evidence provided depends on the

Commission's assessment of the nuances and subtleties

associated with the various positions that are put

forward, and that, in my submission, the Commission

could benefit from cross-examination of the witnesses

on their positions and on their opinions, and that the

Commission could also benefit from the Commission

being in a position to ask the questions that the

Commission has of the witnesses. In a written phase,

the Commission will not have the same level of

benefit. Words are on a page, but you don't get to

have the back-and-forth with a witness that may be

helpful for you as well.

The evidence is technical -- you know,

that's been filed. There's a lot of evidence that's

technical. It's -- there are arguments that are in

the evidence that depend on FERC case law and the

like, which is not the stuff of cross-examination, you

know, it's the stuff of pure argument. But there is

in all of the evidence, there is a foundation of

opinion, there is a foundation of different

perspectives of the way the systems work, different

perspectives on the way the trading works, that are

black and white on a page, but lack the colour that

you'd get again from a full examination.



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I don't want to give you too many examples,

because obviously I want to leave those for cross-

examination, in a hearing, but just, you know, one

limited example would be, for example, the -- we have

an economic test, you know, in the BCTC evidence.

B.C. Hydro says an economic test is not appropriate

for a number of reasons, some of which are legal

analysis, but some of which relate directly to whether

or not it's practical, impossible, hard -- a number of

different ways of characterizing the same point, but a

judgment will have to be made by the Commission at

some point as to whether or not the proxies we use are

good enough for rate-making and a tariff, or whether

they're simply, as Hydro says, inappropriate or -- and

that a better one is impossible to derive.


And I find, looking at the evidence, that

in trying to make -- we can make arguments on the

record, and you can get arguments on the record, but

in my submission it would be very difficult for you to

make a full assessment as to whether or not something

is impossible or merely hard. And if it's hard, how

hard? And if it -- without hearing from the

witnesses, without being -- hearing the questions,

without forming your own questions and forming your

own judgment. Similarly, in the question -- whether



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or not a proxy is good enough to use, I think that

requires a fair bit of judgment from the Commission as

well, and you're going to have to have a sense that

you have as good a record as possible.

The last point on the written versus oral

hearing is, all parties said in the first procedural

conference that what we want to do is get this right.

This is my -- this is, I think, the fourth time that

this issue has been to the Commission. It was here in

'97, it was here in the OATT hearing, we had a written

process before the network economy panel, and we're

here again. And I think all parties said they want to

get it right. In my submission, I'd be remiss if I

didn't say that what we want to prepare for the

Commission is the best and most complete record that

we have, and I think that we cannot do that without

having an oral hearing, to allow all the questions to

be asked and the answers given.

So those are my submissions on the oral

versus written.

Timing of the hearing -- I mentioned filing

of direct evidence in rebuttal. We didn't address

that at the first pre-hearing conference, and I think

it would be appropriate that when we set the hearing

date, we set a week in advance of that, a time for

filing the direct evidence and the rebuttal, if any,



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that comes from the applicant. That step is still not

there, and it should be there. I just add that.

I think that's all I have on the process

issues at this point, Madam Chairman.

THE CHAIRPERSON: Thank you, Mr. Feldberg. And now, Mr.

Miller, will you then invite the intervenors to speak?

MR. MILLER: Yes. The Alberta Coalition.

MR. DALGLEISH: Good morning again. Mr. Feldberg's

organization, I think, is a good one for discussion,

so I'll adopt it. With respect to the continuation

and the schedule of a negotiated settlement procedure,

yes, we concur that it is appropriate to do that. As

Mr. Feldberg indicated, there are currently informal

discussions ongoing which we would hope, if they are

fruitful, could lead to making a negotiated settlement

process itself more fruitful and easier to conduct.

We'll see how that goes, but keeping the NSP in place

makes sense to us.

With respect to his comments on the timing

of a negotiated settlement process, versus the

hearing, we concur that the currently-proposed timing

for the negotiated settlement process should be

maintained. We understand the concern that it backs

onto the hearing quite closely. We were concerned

that any proposed delay of a scheduled date for a

hearing following the NSP might be too long, but the



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time-frame being talked about by Mr. Feldberg of up to

two weeks could be accommodated.

With respect to the matter of a written

versus an oral proceeding, I can be very brief. We

concur that the oral approach is the way to go, given

the nature of this proceeding. I'm not sure you're

going to get too many arguments to the contrary, so I

won't elaborate other than to say, "I agree with Mr.

Feldberg."

With respect to the filing of direct

evidence and rebuttal, I need to, through you, ask Mr.

Feldberg a question. I assume that what he means by

direct evidence is the witness name and CV and areas

of -- that they'll be speaking to in the application,

since all the other evidence has been filed. I note

for the record he's nodding vigorously in agreement.

And with respect to rebuttal --

MR. FELDBERG: I can say "Yes" for the record.

MR. DALGLEISH: Yes, for the record.

THE CHAIRPERSON: That's helpful, to clarify, for the

record.

MR. DALGLEISH: And with respect to the filing of

rebuttal evidence, yes, we would concur that if it's -

- if there is sufficient time, for it to be prepared

in advance of a hearing that has been briefly delayed,

it may assist clarification. Subject to any questions



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you may have, those are my comments at the moment.


MR. DALGLEISH: Thank you.


MR. SIMPSON: Thank you. Commissioner O'Hara. I'll just

follow the path that the two in front of me set. As

far as the NSP is concerned, the AESO is in favour of

the schedule as proposed, as set out. Delay in

hearing of a week or two is acceptable to us. We

believe it should be an oral hearing as well, and we

think that rebuttal evidence is a good idea.

THE CHAIRPERSON: What kind of timing are you thinking

now for the rebuttal evidence? Like, how much time

would you require for that?


MR. SIMPSON: I think Mr. Feldberg proposed a week or two

weeks' delay in the oral hearing, if the rebuttal

evidence could be submitted prior to that, a week

prior to that.

THE CHAIRPERSON: That would be sufficient.

MR. MILLER: I think so.

THE CHAIRPERSON: Thank you, Mr. Simpson.

MR. SIMPSON: Thank you.


MR. CHRISTIAN: Good morning. I can confirm that there

are informal discussions underway already, and on the



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strength of those we believe -- B.C. Hydro believes

that the NSP dates from September 6th to 8th ought to be

preserved, and that an opportunity to settle this

matter ought to be attempted.

With respect to the start of the oral

phase, B.C. Hydro agrees that a week or two delay

would be useful. The reasons articulated by Mr.

Feldberg relate primarily to preparation issues and we

endorse those reasons. I'd also like to add that it

occasionally occurs that a negotiated settlement

process results in a settlement not of all issues but

only of some issues. Typically the practice is to

allow a delay between the end of NSP and the start of

the oral hearing, to allow the Commission to consider

which issues have been settled so they can be removed

from the issues list for the oral phase if there is to

be one. And so that would be another reason to delay

from the start of the oral phase from the 11th to a

later date, and we agree a week or two ought to be

sufficient for that purpose.

Conversely, however, if the oral phase, if

there to be one, doesn't commence -- or does commence

on the 11th, we would suggest that maybe the NSP

process could be shortened by a day, just to give

everybody one extra day of opportunity to prepare for

the hearing.



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With respect to an oral phase or not, B.C.

Hydro is not opposed to an oral phase but isn't as --

doesn't believe as strongly as the parties you've

heard from previously that it's necessary. We observe

that the provision at issue in this hearing, Section

28.4 of BCTC's OATT, is three sentences long and it's

in a very very small piece of a several hundred page

tariff. The evidence that's been filed already in

this matter, I didn't want to strain my back carrying

it up but you can see it's in the corner of my table

there. That's B.C. Hydro's evidence and information

request responses, those of BCTC, and those of Alberta

Coalition. There's an enormous amount of evidence on

the record already with respect to the proposals that

are before the Commission, and we just, I guess,

question whether it's going to be that much benefit to

the Commission to hear several days of oral testimony

and end up with a stack of transcripts to review as

well.

We agree that an opportunity to be made for

filing direct evidence at the very least. That has to

happen, I think, and parties need to know who the

witnesses are going to be and which areas of the

evidence they're going to be speaking to in order to

prepare cross-examination adequately; and rebuttal

evidence, so provision ought to be made for filing



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rebuttal evidence if necessary.

Now, I can speak to the other issues I have

raised at this time if you would prefer, or I can wait

till the four issues that have been tabled effectively

are dealt with by the rest of the intervenors.

THE CHAIRPERSON: Why don't we leave them to the third

agenda item so we can stay focused on these first

matters that --

MR. CHRISTIAN: Thank you.

THE CHAIRPERSON: Thank you, Mr. Christie.

MR. MILLER: Joint Industry Electricity Steering

Committee.

MR. POTTS: No comment.

MR. MILLER: EPCOR.

MR. JURIJEW: Thank you. For the most part, EPCOR is

willing to go with the flow here. We are

participating in the informal settlement and we think

that's a valuable process. And our thought is, maybe

it's premature to adjourn the start of the oral

hearing, and perhaps it would add some more immediacy

to the informal settlements if that date was

maintained, and parties were to advise, say by

September 1st, whether they think there's any merit in

proceeding with the formal negotiated settlement. And

I think by September 1st we should know whether

something is possible or not and what the scope of



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that possibility is.


And then that would, I think, assist B.C.

Hydro's suggestion that maybe the negotiated

settlement be shortened to two days instead of three

days. But we'd be reluctant to automatically have a

two-week adjournment of the hearing at this stage.

There'll be some more information. We'll know a lot

more by September 1st.

THE CHAIRPERSON: And how would you suggest then, Mr.

Lowe, that this process would go about? How would the

notification work then by September 1st what changes

would take place?

MR. LOWE: I would propose that the date for the oral

phase hearing be maintained, and the dates for the

negotiated settlement be maintained, and the parties

be directed by September 1st to write to the board, or

through the applicant have the applicant report on

whether there's any appetite to proceed with a

negotiated settlement, and if so, whether it would be

two or three days. So it leaves it a bit up in the

air, but I think it'll be a useful device to keep

people focused on settlement. Most settlements are

effectively made at the courtroom steps, of course.

Now as for oral, we would side with the

oral folks here. And as far as direct and rebuttal



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evidence, everything we've heard sounds reasonable.

We wonder if there needs to be a delay just to file

rebuttal evidence or if it couldn't just be filed in

the next week or so, in the interests of maintaining

the schedule.

And those are my submissions. Thank you.

THE CHAIRPERSON: Thank you, Mr. Lowe.


MR. FELDBERG: I think from all of that, relatively

surprisingly, the only one that I have to reply to is

Mr. Lowe, who I note doesn't appear to have filed

evidence so he's setting our dates for us.

I guess a couple of points on his

submissions with respect to keeping a date certain for

the hearing and leaving the dates and then seeing what

happens in an informal process, and then maybe we

could advise and the like.

The difficulty that I have with that is

really threefold. The first is I think it's important

for everybody to have a date certain for the oral

phase as early as possible, to know that's the date

that it's going to proceed. As a practical matter

that's just the way it works when there are a number

of parties and when we have to get the Commission

Staff and organization organized for that.

The settlement on the courtroom steps



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proposal is I guess a little surprising to me in this

sense. What we're talking about here is drafting of

tariff provisions, and the applicant particularly has

a responsibility to ensure that those tariff

provisions are not only acceptable to its customers

but that they work, that they're fair, that they're

proper, they follow proper tariff principles, et

cetera, et cetera. We're not in a car crash case

where we're trying to figure out how much you get for

a whipper. That's not what we're engaged in and

that's not the process that we're engaged in.

The difficulty that I have with leaving it

up to a group involved in informal discussions to

effectively determine the process for the -- the

official process as I might describe it of the NSP and

the hearing process, is I'm not sure at this point

that all of the parties are engaged in those informal

discussions. I can't state right now what the

applicant's role in those discussions, if any, will

be. And I am concerned that we not let an informal

process outside of the Commission's process dictate

what the Commission's process will be. So my

preference, my strong preference would be that we

determine the process here as we've described it and

as the other intervenors have accepted, rather than

rely on a roll the dice type of approach, and the



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process of course trading outside the Commission's

process. There is a responsibility obviously with a

regulated process to other intervenors, to other

parties, to customers who aren't here, et cetera, that

needs to have some sort of Commission process

associated with it.

I think that's all I have to say.

THE CHAIRPERSON: Thank you, Mr. Feldberg. So with this

one then, perhaps maybe one day to proceed is that

we'll then hear comments regarding more specifically

the regulatory timetable, and then intervenors can

also still comment on the EPCOR proposal. Does that

sound good, Mr. Miller?

MR. MILLER: I believe once again, British Columbia

Transmission Corporation would be first to address the

next agenda item, which is regulatory timetable with

any more specific dates or suggestions.

MR. FELDBERG: I actually don't think I have a lot more

to day about the regulatory timetable, given that the

steps that we've outlined, which is I think all that

needs to occur at this stage is a negotiated

settlement process, the filing of the direct evidence,

and the rebuttal if appropriate at that time, and then

the oral hearing process.

My suggestion would be, as I said, the

adjournment of the hearing, and I have to caution that



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the dates of September 25th and -- 25th is already set

for a BCTC negotiated settlement process, so the same

people that are involved in this process are involved

in that one. That would be a difficult time,

obviously, for a hearing to occur.


But a one-week delay would be fine, in our

-- if we could adjourn the hearing for a week, that

would probably work very well for us.

And in terms of the filing of direct

evidence and rebuttal if necessary, a week prior to

that, which would coincide with the end of the

negotiated settlement process, that would be fine too.

THE CHAIRPERSON: So you do not have a more specific

straw man with the date that we --

MR. FELDBERG: Well, I think there's --

THE CHAIRPERSON: -- had last time. But we --

MR. FELDBERG: -- I think there's only a couple of dates.

THE CHAIRPERSON: -- with the -- right.

MR. FELDBERG: I think there's only two dates.

THE CHAIRPERSON: And between this one-week delay time

frame pieces would fall in place then.

MR. FELDBERG: That's right. I really think there's only

two dates that matter, and so -- and that would be --

so if you took a look at it Monday, September 11th, for

filing of direct evidence, and rebuttal if necessary,



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and a hearing starting the week of September 18th, that

would be acceptable for us.

THE CHAIRPERSON: Thank you, Mr. Feldberg.


MR. DALGLEISH: Thank you. We as well covered much of

our comments on the specific scheduling in our earlier

discussion. With respect to the matters that Mr. Lowe

raised, I am very sympathetic to the notion that time

pressure assists settlement discussions staying

focused. But at the same time, the complexity of some

of the matters raised suggests that trying to compress

it too tightly might not assist if there is a hope of

reaching settlement on some or all issues. So on that

one, I will, with great reluctance to offend my friend

Mr. Lowe, stay with Mr. Feldberg's perspective on that

one.

With respect to specific dates, as long as

sufficient time is allowed for the preparation --

consideration and preparation of any rebuttal, and as

long as the rebuttal is to be filed a few days before

the hearing starts, in the normal process that will

provide enough time to consider cross-examination on

it, and so forth.

With respect to specific hearing dates, as

I mentioned earlier, a week or two is not problematic

for us. We were worried about longer matters. If



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there is to be some further debate about this, I note

that I have a Board meeting scheduled on the 20th of

September in Calgary. I will miss it if I must,

because I don't think my particular circumstances

ought to drive the process here, but I thought I would

at least alert you to that, so that it was at least

known. Subject to any questions you have, those are

my comments.

THE CHAIRPERSON: And you were Mr. Dalgleish.

MR. DALGLEISH: I am indeed Mr. Dalgleish.

THE CHAIRPERSON: Thank you. Thank you, Mr. Dalgleish.



MR. SIMPSON: I think the only comment that the AESO has

is that if there's going to be a delay in the oral

hearing, we would prefer it not to be more than a week

or two, which would put it on the 18th or the 25th, I

believe. And that any rebuttal evidence, we would

prefer to have it a week before the start of the oral

hearings.

THE CHAIRPERSON: Thank you, Mr. Simpson.


MR. CHRISTIAN: With respect to Epcor's proposal that

parties to the informal discussions advise the

Commission -- I think by September 1st was the proposal

-- B.C. Hydro endorses Mr. Feldberg's submissions.



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One of the scheduling issues, though, that

hasn't been addressed by any of the parties here, and

that is understandable, because they all believe an

oral phase is necessary and presumably assume an oral

phase will follow -- I don't think B.C. Hydro, as I've

mentioned, is convinced that an oral phase is

necessary and, of course, Madam Chairman hasn't ruled

on that. It seems to me that it might be useful to

make a few comments on what this proceeding might look

like if no oral phase occurs. The NSP, we believe,

would go ahead regardless of whether an oral phase

happens. If the NSP concludes with a settlement of

all issues, of course, then the only -- then there's a

process that follows for the Commission review and

ultimately the endorsement of that settlement.

If the NSP results in only a partial

settlement, then some issues, again, will have to go

to the Commission. It's at that stage, it seems to

me, that an oral -- sorry, a written briefing schedule

for the remaining unresolved issues needs to be

considered, and I think I can make some submissions on

that right now, if I may.

In order to make those submissions, though,

I need to give a little bit of an explanation of the -

- the nature of the evidence before the Commission

right now. In essence, there are three proposals put



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before the Commission -- one by BCTC, as the

applicant, another proposal put forward by the Alberta

Coalition, and a third proposal put forward by B.C.

Hydro. The first two are very similar in one

essential element -- that is, they take, insofar as

they both rely on an economic test, they take a

longer-term economic view of when network economy

should be used or should be allowed to be used to

import energy into the B.C. Hydro system. B.C.

Hydro's proposal, conversely, takes a much more

physical and in-the-hour perspective.

And in that sense, there are -- there's

very much a strong alignment between the Alberta

Coalition proposal and the BCTC proposal. And because

there are these essentially three proposals before the

Commission, it seems to me that the normal process for

written briefings wouldn't be appropriate. The normal

process would typically be that the applicant files an

argument, intervenors file arguments in response, and

then the applicant gets a final word. In the

circumstances we have here, with three different

proponents, two of whom are significantly aligned in

one important area, in B.C. Hydro's submission it

makes more sense for the written arguments to be done

in the following way -- that each of B.C. Hydro, BCTC

and the Alberta Coalition file arguments in support of



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their proposals at the same time -- that all

intervenors, including the proponents, get to respond

in reply to the arguments I've read -- and then,

thirdly, the proponents again have a final word in

reply.

That, I think, is consistent with the

nature of the fact that you have three proposals

before you, and levels the playing field somewhat

between B.C. Hydro on one hand, with its view of the

appropriate nature of the network economy test, and

BCTC and the Alberta Coalition on the other.



Committee.

MR. POTTS: No comment.

MR. MILLER: Epcor.

MR. LOWE: Well, on our September 1 proposal, I don't

feel the love from the room yet. I would -- I'd just

note that by September 1st, that the main stakeholders

should know whether a settlement is the art of the

possible, and there might be some merit in just

keeping the date that you have until then, and making

the call on September 1st. But I recognize that we're

deep in our backfield on this one.

As for the proposal of B.C. Hydro in the

event of a written proceeding, the steps that would



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follow for the presentation of argument, that seems to

us to be not all that unreasonable. That's something

that we could think about. But I'm not sure that that

is a decision which needs to be made right now, when

we don't know whether we're going oral or written.

And maybe that's something that, if anything could be

sorted out in the negotiated settlement process --

Thank you.

THE CHAIRPERSON: Thank you, Mr. Lowe.



MR. FELDBERG: I think of all that, the only one that I

need to respond to is Mr. Christian's suggestions on

the written process. And as I understood Mr.

Christian, and I may have got this wrong, he proposed

that there would be -- if I understood it, that there

would be a set of arguments from everybody

effectively, a set of responses from everybody

effectively, and a set of replies from everybody, with

perhaps some variation within that I may have not got

proper.

I don't see a need, frankly, Commissioner

O'Hara, to depart from the normal process in this.

What we have is an application that's been filed. We

have responses to it that agree and disagree to

varying degrees with that application, evidence is,



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you know, on information responses which are filed.

There are differences between BCTC and the Alberta

Coalition, just as there are differences between

Alberta and B.C. Hydro. There are places where we

agree more with B.C. Hydro than where we agree with

the Alberta Coalition, and there's really nothing out

of the ordinary in this proceeding with respect to

that. It depends how you characterize the issues, I

suppose, as to who you're more aligned with, but

that's a matter of degree rather than a matter of

absolute measure.

The normal process would be for the

applicant to file its argument, the intervenors to

file their responses, and the applicant to file its

reply. And in my submission, that's the normal

process and the process that ought to apply in this

proceeding.


Now then, it's time to move to the third

agenda item, which is everything else that is

outstanding. So once again, Mr. Feldberg, do you have

anything more to add?

MR. FELDBERG: I don't have any other matters. I'll just

respond to what my friends raised.

THE CHAIRPERSON: Mr. Miller.




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MR. DALGLEISH: With your indulgence I'll use the other

item slot to make a brief comment on the matters that

were raised after I last spoke, specifically Mr.

Christian's proposal with respect to a written

proceeding which I suspect also might be his proposal

with respect to argument after an oral proceeding.

The only thing that I would add to the discussion on

that is that I expect that B.C. Hydro would like an

opportunity to be responding to our arguments, and we

certainly would like the same with respect to theirs.

So whatever is decided upon, be it by way of written

proceeding or for argument after an oral proceeding, I

would put that consideration forward.

With respect to -- I'll try to anticipate

one other matter. Mr. Christian has indicated he is

going to speak to the matter of the dispute between

B.C. Hydro and the Alberta Coalition with respect to

two outstanding information requests. We have talked

about this, and I expect that what he is going to be

proposing is something that we're prepared to live

with. And I must say I'm surprised. That's all I

need to say at the moment. Thank you.

THE CHAIRPERSON: That's helpful. Thank you, Mr.

Dalgleish.

MR. MILLER: The Alberta Electric System Operator.

MR. SIMPSON: The AESO has no other matters.



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MR. CHRISTIAN: Let me begin with the least controversial

item that I have here on my list still. That is the

unanswered IRs. Mr. Dalgleish is correct. We have

spoken. I'd like to propose that B.C. Hydro file

written submissions on Monday the 28th arguing for an

order from the Commission directing the Alberta

Coalition to answer the unanswered information

requests. And we would propose two or three days for

the Alberta Coalition to file reply submissions, and a

day after that for Hydro to come up with final word if

necessary.


THE CHAIRPERSON: So that's now Monday, August 28th.

MR. CHRISTIAN: Right. And we would file that by the end

of the day, Monday.

THE CHAIRPERSON: Sounds good, thank you.

MR. CHRISTIAN: All right. Another -- I think what

should be a relatively uncontroversial issue which I

briefly mentioned when I first spoke today, and that

is with respect to BCTC's weekly reports. As the

Commission undoubtedly knows, BCTC has been filing

weekly reports with respect to network economy usage,

and its impact on other transmission services. The

most recent weekly report, I believe that's on the



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record, is from some time in July. This hearing

doesn't look like it's going to get underway till at

least -- if there's an oral phase -- till the 11th, and

regardless of when there's an oral phase, there will

be a written briefing schedule. It's part of B.C.

Hydro's case that the issues arising from network

economy have been overstated -- that is, the impacts

of B.C. Hydro's use of network economy have been

overstated. We believe that the weekly reports that

have been produced for some relatively short time now

support that position. And so we would seek an Order

from this Commission, either directing BCTC to file

those on the record in this proceeding up to the time

that the evidence closes, or just an Order, I suppose,

making them part of the record regardless of whether

they're filed. Either way, they're on the Internet, I

understand, and can be readily printed off by all

parties who wish to avail themselves of them.

Going back to my comments, I think I'm

going to have to go back to my comments with respect

to a written briefing schedule. I obviously wasn't as

clear as I should have been. First of all, it wasn't

our intention that all parties would be filing

argument at first instance. Rather, it would be the

proponents, the three parties who actually have a

proposal before the Commission, would file arguments



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firstly in support of their proposals. Getting to Mr.

Dalgleish's point, all parties -- for the second step

of the written briefing schedule, all parties,

including the proponents, would have an opportunity to

file argument in response, commenting on the arguments

made by the proponents at first instance. And then

lastly, the third step would be reply argument, just

by the proponents again, not by all parties. So it

goes proponents, all parties, proponents. And by

"proponents", again, to be clear, I mean BCTC, Alberta

Coalition, and B.C. Hydro, each of whom has a

significant proposal before this Commission.

And that would be a written briefing

schedule regardless of whether there's an oral phase.

In effect, if there is to be no oral phase, then upon

the conclusion of the NSP, one way or another, the

evidence is effectively closed in this proceeding, and

we go right to written argument. If there is an oral

phase, then the evidence closes subsequent to the

close of the oral phase. So, the submissions I'm

making with respect to this written briefing schedule

apply regardless of whether there's an oral phase or

not.

And lastly, I'd like to address something

that we may not get a chance to address again, and

that is the order of witness panels. If there is to



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be an oral phase, as I've mentioned, in B.C. Hydro's

view, BCTC's proposal and the Alberta Coalition's

proposal are very much aligned, and one significant

element -- and one significant way of looking at the

use of network economy by B.C. Hydro -- that is, both

those parties take a long-term or temporally long-term

view of when network economy is appropriate, or when

an economic test might be appropriate, and focus less

on the physical delivery in the hour, unlike B.C.

Hydro's proposal. And in that sense, they are

directionally aligned, and we think it would be

appropriate in that circumstance for the BCTC panel

and the Alberta Coalition panel to precede the B.C.

Hydro panel, if there is to be an oral phase.

If the BCTC panel goes first, the B.C.

Hydro panel goes second, and BC -- and the Alberta

Coalition Panel goes third, which is the other

alternative, I believe, it effectively amounts to a

splitting of the case on one of the central issues in

this proceeding. And that would be unfair to B.C.

Hydro.


I'll just check with Mr. MacDougall to make

sure I haven't missed anything. And that's all I have

on, I think, the third agenda item.



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Committee.

MR. POTTS: Good morning, Commissioner O'Hara. I want to

express my appreciation for being allowed to intervene

in this process at a relatively late time. We have

just been granted intervenor status and I would have

to admit that based on this recent intervention

review, my personal familiarity with the complete

record is not complete. But I am here in reviewing

this process to express the concern of customers with

regard to the possible outcome and with regard to the

process itself.

The Joint Industry Electricity Steering

Committee represents 24 industrial customers who

operate at 30 locations with about 15,000 employees in

their electric power intensive businesses. We pay

about 20 percent of the B.C. Hydro revenue

requirement, amounting to approximately half a billion

dollars a year. And whether it's BCTC costs or B.C.

Hydro costs or trade revenue results, at least up to

the $200 million -- it's offset against B.C. Hydro

cost -- the ultimate payer of the bill is the

customers. And this is the case for trade results,

which are also offset, operating and energy costs.

And this proceeding as we understand it affects the



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rules of access, affecting the various parties'

ability to access the BCTC transmission system and

being able to buy and sell electric power through the

various markets.

As a result, we have two fundamental

concerns, I guess. One is that the process itself be

efficient and cost-effective, and the second is that

the customer interests be protected. I, in the

workshop yesterday asked repeatedly what kind of

dollars are involved here, and the basic answer I got

was "We don't know," and further it appeared to be the

answer was that it's impossible to come up with a

figure.

As I look around the room here, it's

doubtful in my mind that the dollar figure is small.

The interest here by various very important people,

very skilled and competent counsel, tells me something

about the magnitude of the economic impact that may be

facing B.C. Hydro's customers. I guess we would urge

that because of the complexity and difficulties of

this issue, we would urge the participants to actively

work through the NSP process to come to a conclusion,

but that any presentation for final approval by the

Commission include a credible estimate of the impact

on B.C. Hydro's customers. We think that is

absolutely essential, and while they tell me it can't



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be done, I remain unconvinced.

That concludes our remarks and we

appreciate this opportunity. Thank you.

THE CHAIRPERSON: Thank you, Mr. Potts.

MR. MILLER: EPCOR Utilities. EPCOR has indicated it has

no further submissions.

I believe at this point, Madam Chair, it

would be appropriate to step out of order for a moment

and let the Alberta Coalition respond to B.C. Hydro

before BCTC makes its final reply submissions.

THE CHAIRPERSON: That sounds good.

MR. DALGLEISH: Thank you very much. The matter to which

I wish to respond is the order of witness panels as

proposed by B.C. Hydro. In my submission, the better

perspective is to recognize that what this hearing is

about is that there is an applicant who goes first,

there is B.C. Hydro who is the user of the network

economy service, which is what this application is all

about, and then there are people like the Alberta

Coalition who are affected by B.C. Hydro's use of that

service. And in my submission, that better fits what

the order of the witness panels should be.

The suggestion made by Mr. Christian that

doing otherwise would amount to a splitting of the

case is, in my submission, not an accurate one.




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We are not co-applicants and, as Mr.

Feldberg has pointed out, our positions differ in many

ways from those of the applicant, just as they differ

in many ways from those of B.C. Hydro. Thank you so

much.

THE CHAIRPERSON: Thank you, Mr. Dalgleish.


MR. FELDBERG: I have a couple of comments. First, with

respect to Mr. Dalgleish's submissions with respect to

the proposal for the order of argument, where Mr.

Dalgleish had indicated that it would be advantageous

to both the Alberta Coalition and to B.C. Hydro to

have the opportunity to respond to each other's

argument, in my submission that would be appropriate.

I left that step out of mine, and the step then would

be, applicants' argument, intervenors' arguments,

intervenors' response to each other's arguments, and a

final reply by the applicant. That would be the order

that I would suggest for argument.

Mr. Christian asked for a direction that

the weekly reports be filed with the Commission, and

BCTC has no objection to that, if that's something the

Commission wishes to order.

With respect to the order of the witness

panels, we're first. And we will remain first. And

the -- we take no position on who follows. And other



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26 C A A R S


than to remind the Commission that there may be,

depending on what's raised, the prospect for a

rebuttal panel from the applicant at the end,

depending on what's raised at the hearing.

I think if you can bear with me for a

moment, I think that's all I have, but -- that's it.

THE CHAIRPERSON: Thank you, Mr. Feldberg. I believe

now, then, that this brings us to the conclusion of

this procedural conference. But before I conclude it,

I just wish to ensure that there are no possible other

matters that I have missed that are of importance and

need to be addressed, so this is your last call, your

last chance.

Hearing none, then, we will conclude

procedural conference. Thank you, everybody, for

attending, and for your cooperation in moving through

these issues quite efficiently. So, let's stay on

track. Thank you very much.

(PROCEEDINGS ADJOURNED AT 11:03 A.M.)

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