BRITISH COLUMBIA UTILITIES COMMISSION€¦ · MR. AHMED: I believe the next exhibit would be C5-10. THE CHAIRPERSON: Thank you. (BRITISH COLUMBIA GOVERNMENT STATEMENT: MINISTER'S

Allwest Reporting Ltd. #1200 - 1125 Howe Street Vancouver, B.C. V6Z 2K8

BRITISH COLUMBIA UTILITIES COMMISSION

IN THE MATTER OF THE UTILITIES COMMISSION ACT R.S.B.C. 1996, CHAPTER 473

And

British Columbia Utilities Commission - An Inquiry into

Gasoline and Diesel Prices in British Columbia - Project No. 1599007

BEFORE:

D. Morton, Chair/Panel Chair

D. Cote, Commissioner

M Doehler, Commissioner

VOLUME 3

ORAL WORKSHOP

VANCOUVER, B.C. July 19th, 2019

APPEARANCES L. BUSSOLI, Commission Counsel M. GHIKAS, Parkland Fuel Corporation T. AHMED, M. NOEL-BENTLEY, T. OLENIUK, Suncor Energy C. HUSTWICK, J. MCLEAN, B. WALLIN, J. VAILLANT, K. WRIGHT, 7-Eleven Canada Inc. N. LIU, J. MOONEY I. THOMSON Advanced Biofuels Canada Association J. CHARLEBOIS, National Energy Board B. VAN SLUYS, L. DINELEY, Husky Energy Inc. M. KEEN, Shell Canada Limited N. JONES, T. GELBMAN, Imperial Oil S. CHRISTENSEN, B. SCAMMELL, M. CLARKE, Super Save Group W. VAN DEKERKHOVE, J. ALLEN,

INDEX PAGE

JULY 17, 2019 - VOLUME 1

THE DEETKEN GROUP PANEL: ELISE LEPINE, Affirmed SAMIR SHAW, Affirmed Examination by Mr. Ghikas ..................... 17 Examination by Mr. Wright ..................... 66 Examination by Mr. Thomson .................... 72

NATIONAL ENERGY BOARD PANEL: JEAN-DENIS CHARLEBOIS, Affirmed BRYCE VAN SLUYS, Affirmed Opening Statement ............................. 78 Answers to Questions put to NEB ............... 80 Examination by Mr. Thomson .................... 72

PARKLAND FUEL CORPORATION PANEL: JEAN-RYAN CURTIS KROGMEIER, Affirmed: IAN WHITE, Affirmed: HENRY KAHWATY, Affirmed: Presentation ................................. 101 Questions by Panel ........................... 212 Examination by Mr. Bussoli ................... 237 Opening Statement by Mr. Keen ..................... 247 SHELL CANADA LIMITED PANEL SIGOURNEY COURTRIGHT, Affirmed: ISABELLE FRIZZLE, Affirmed: NICOLAS BOUTILIER, Affirmed: Questions by Panel ........................... 251 [Moved to In Camera/Confidential Session] .... 263 IMPERIAL OIL LIMITED PANEL BRIAN ROBERT SCAMMELL, Affirmed: Presentation ................................. 264 Examination by Mr. Bussoli ................... 295

INDEX PAGE

JULY 18, 2019 - VOLUME 2 SUNCOR ENERGY PANEL JAMES McLEAN, Affirmed: BRENT WALLIN, Affirmed: Presentation & Questions by Panel ............ 301 Examination by Mr. Bussoli ................... 351 [Moved to In Camera/Confidential Session] .... 354

THE DEETKEN GROUP PANEL: ELISE LEPINE, Resumed: SAMIR SHAW, Resumed: Presentation ................................. 355 Examination by Mr. Eliesen/Ms. Allan ......... 361 Examination by Mr. Bussoli ................... 382 Questions by the Panel ....................... 383 Examination by Mr. Wright .................... 409 Examination by Mr. Ghikas .................... 417 Examination by Mr. Thomson ................... 425

MARC ELIESEN, Affirmed: ROBIN ALLEN, Affirmed:

Presentation ................................. 430 Examination by Mr. Bussoli ................... 491

ADVANCED BIOFUELS CANADA ASSOCIATION PANEL:

IAN THOMSON, Affirmed: Presentation ................................. 493 Opening Statement by Mr. Dineley .................. 530

HUSKY ENERGY INC. PANEL:

KRISTA DAWN FRIESEN, Affirmed: Presentation ................................. 533 Closing Statement by Mr. Charlebois ............... 635

INDEX PAGE

7-ELEVEN CANADA INC. PANEL:

DOUG ROSENCRANS, Affirmed: Presentation ................................. 560 Examination by Mr. Bussoli ................... 571


NAVIUS RESEARCH PANEL:

MICHAEL JOHN WOLINETZ, Affirmed:

Examination in Chief by Mr. Bussoli .......... 575 Examination by Mr. Ahmed ..................... 577 Examination by Mr. Bussoli ................... 620

INDEX OF EXHIBITS

NO. DESCRIPTION PAGE


A2-1-2 RÉSUMÉ OF ELISE LEPINE ....................... 17

C5-7 NATIONAL POST ARTICLE ........................ 59 C5-8 PARKLAND POWERPOINT PRESENTATION ............. 115 C5-9 POWERPOINT PRESENTATION "THE MARKETS FOR GASOLINE AND DIESEL IN BRITISH COLUMBIA", DR. KAHWATY, JULY 17, 2019 ................... 115


C2-5 POWERPOINT PRESENTATION OF SUNCOR ENERGY ..... 353 C2-1-3 POWERPOINT PRESENTATION "THE DEETKEN GROUP -

UPDATE FOR ORAL HEARINGS, JULY 2019 .......... 361 C9-3 VANCOUVER SUN ARTICLE RE: INDUSTRIAL MARKET .. 417 C9-4 VANCOUVER SUN ARTICLE RE: COMMERCIAL REAL

ESTATE ....................................... 417 C9-5 CBRE ARTICLE ................................. 417 C1-4 PRESENTATION OF R. ALLAN AND M. ELIESEN ...... 491 C-6-4 POWERPOINT PRESENTATION OF ADVANCED BIOFUELS

CANADA ASSOCIATION ........................... 529

JULY 19, 2019 - VOLUME 3 C5-10 BRITISH COLUMBIA GOVERNMENT STATEMENT:

MINISTER'S STATED ON JANUARY LABOUR FORCE STATISTIC .................................... 577

INDEX OF EXHIBITS

NO. DESCRIPTION PAGE C5-11 DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT & TOURISM - ENERGY INDUSTRY

INFORMATION REPORTING PROGRAM ................ 589 C5-12 DBEDT, SCHEDULE "A", 2010-2011 MONTHLY FILING DEADLINES ............................. 590 C5-13 DBEDT - ENERGY INDUSTRY INFORMATION REPORTING PROGRAM ("EIIRP") INSTRUCTIONS ..... 592 C5-14 THREE CALIFORNIA ENERGY COMMISSION REPORTING

FORMS ........................................ 602 C5-15 WASHINGTON STATE, OFFICE OF THE ATTORNEY

GENERAL, WASHINGTON STATE QUARTERLY GASOLINE REPORT ....................................... 604

C5-16 WASHINGTON STATE 2007-08 GAS PRICE STUDY,

FINAL REPORT ................................. 615

INFORMATION REQUESTS

JULY 17, 2019 - VOLUME 1 Pages: 163, 192, 210, 212, 221, 224, 226, 283, 242 x 2, 245


Pages: 330, 367, 385


No Information Requests

GASOLINE & DIESEL PRICES IN B.C. INQUIRY Oral Workshop - July 19th, 2019 - Volume 3 Page: 574

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Allwest Reporting Ltd., Vancouver, B.C.

VANCOUVER, B.C.

July 19th, 2019

(PROCEEDINGS RESUMED AT 9:44 A.M.)

THE CHAIRPERSON: Please be seated.

Good morning everybody. My apologies,

we're a little later than we planned to be, but I

thought I'd be consistent with the last two -- the

last couple of days.

So I won't make any further opening

remarks. I think we've covered everything that we

need to over the last couple of days. I will just

point out that what's on the agenda today though is --

that we have the second of the Commission's experts or

maybe you're the first of two experts, I don't know

what order, but we have our other expert available for

questioning, and I understand that we have interveners

that want to question our expert. And then this

afternoon or whenever we're finished with this process

we'll move on to any closing remarks that anyone has.

So Mr. Bussoli, I'll hand it over to you.

MR. BUSSOLI: Thank you, Mr. Chair. I present to you

Michael Wolinetz of Navius Research. And if we could

have the witness affirmed at this time, Mr. Hearing

Officer, that would be appreciated.

NAVIUS RESEARCH PANEL:

MICHAEL JOHN WOLINETZ, Affirmed:


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THE HEARING OFFICER: Please state your full name for

the record?

MR. WOLINETZ: My name is Michael John Wolinetz.

THE HEARING OFFICER: Thank you very much.

EXAMINATION IN CHIEF BY MR. BUSSOLI:

MR. BUSSOLI: Q: Mr. Wolinetz, can you confirm that

you're a representative of Navius Research?

MR. WOLINETZ: A: Yes, I am.

MR. BUSSOLI: Q: And you're a partner with that firm?

MR. WOLINETZ: A: Yes, I am.

MR. BUSSOLI: Q: And you've had that position since?

MR. WOLINETZ: A: 2011 strictly speaking, but I've

working in this type of role since 2008.

MR. BUSSOLI: Q: And you're also an adjunct professor

with Simon Fraser University, is that correct?

MR. WOLINETZ: A: That's correct, yeah.

MR. BUSSOLI: Q: And since when?

MR. WOLINETZ: A: That has been since 2014 or perhaps

'15.

MR. BUSSOLI: Q: Okay. And you prepared a report for

the Utilities Commission in this inquiry, is that

correct?

MR. WOLINETZ: A: That's correct, yeah.

MR. BUSSOLI: Q: And that's Exhibit A2-2 for reference.

That's dated June 20th, 2019, correct?

MR. WOLINETZ: A: Correct.


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MR. BUSSOLI: Q: And do you have any corrections or

additions or anything that you'd like to change or

amend that to that report?

MR. WOLINETZ: A: No, I don't.

MR. BUSSOLI: Q: And is your report and the evidence

referred to in that report true and accurate to the

best of your knowledge?

MR. WOLINETZ: A: It is true and accurate to the best

of my knowledge.

MR. BUSSOLI: Q: And you adopt that report as your

direct testimony in this proceeding?

MR. WOLINETZ: A: I do.

MR. BUSSOLI: Q: Do you have any opening statements

that you'd like to make with respect to that report?

MR. WOLINETZ: A: Sure. Very briefly I'll just speak

to the scope of the report.

It was produced to provide a primer on the

use of gasoline and diesel price regulation in North

America, as well as price transparency measures and to

provide some background on potential market conditions

that may indicate a need for additional price

regulation. So just to clarify, the report is in no

way meant to come to any conclusions as to whether

there is an issue in the British Columbian or Lower

Mainland fuel price market.

MR. BUSSOLI: Thank you. Thank you, Mr. Wolinetz.


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Mr. Chair, he is now available for a

questioning by interveners. I believe Parkland had

indicated that they had some questions and ask that

they be called up.

THE CHAIRPERSON: Thank you, Mr. Bussoli.

Mr. Ahmed?

MR. AHMED: Thank you, Mr. Chair. Perhaps while I'm up

here, as a housekeeping matter before we get to

questions, when Dr. Kahwaty was here on Wednesday

afternoon he referred to a statement from the

government of labour force statistics and he indicated

that it could be filed. So we have a copy, we tracked

it down and we're able to file it now if you'd like.

THE CHAIRPERSON: Please, please do.

MR. AHMED: I believe the next exhibit would be C5-10.

THE CHAIRPERSON: Thank you.

(BRITISH COLUMBIA GOVERNMENT STATEMENT: MINISTER'S

STATED ON JANUARY LABOUR FORCE STATISTICS MARKED

EXHIBIT C5-10)

THE CHAIRPERSON: Please, go ahead when you're ready.

Thanks.

MR. AHMED: Thanks, Mr. Chair.

EXAMINATION BY MR. AHMED:

MR. AHMED: Q: Good morning, Mr. Wolinetz.

MR. WOLINETZ: A: Good morning.

MR. AHMED: Q: My name is Tariq Ahmed, I'm one of the


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lawyers for Parkland in this matter. I assume you

have before you your report, which is Exhibit A2-2.

MR. WOLINETZ: A: I do, yeah.

MR. AHMED: Q: That's primary what I'll be asking

about. There are some other documents I forwarded to

Commission counsel yesterday. You've received those?

MR. WOLINETZ: A: I received them electronically this

morning, so I don't have them in front of me.

MR. AHMED: Q: We've got paper copies. If we get to

them we'll provide them to you.

Mr. Wolinetz, one of the things your report

examined was price transparency in British Columbia

and elsewhere in North America, correct?

Proceeding Time 9:50 a.m. T2


MR. AHMED: Q: And in your report you state that price

transparency in British Columbia is the same as

elsewhere on the continent?

MR. WOLINETZ: A: Yeah, largely speaking it is. There

are, for example, subscriptions to things like OPIS

that provide a similar degree of information for

British Columbia as they do in many other markets in

North America. That being said, there are some places

where there is additional price transparency. So for

example, in Hawaii and in California there are

regulations that require additional reporting to


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energy regulators or similar types of bodies.

MR. AHMED: Q: And I think perhaps it's worth taking a

moment to describe what you mean when you say "price

transparency" in the context of your report. And I

think you define it on the first page of your report,

and you say,

"In this context, "price transparency" refers to

the availability of data that would allow a

suitably skilled analyst to explain the prices

observed in the market."

That's what you say.

MR. WOLINETZ: A: Yeah, that's correct. And the reason

I make that clarification is because when people talk

about price transparency sometimes their meaning is

the retail price fully transparent to consumers and

that's not what I'm talking about here. And also in

terms of that, I don't make any specific statement as

to whether this additional information is available to

consumers either. So there's no assumption here that

this is information being made public if there is

additional transparency.

MR. AHMED: Q: So would it be fair that perhaps the

someone who receives this information should be in

confidence like the government or a regulator?

MR. WOLINETZ: A: Absolutely, yeah. And in fact that's

in general how it's worked in Hawaii and California.


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MR. AHMED: Q: Thank you. Could you please go to page

11 of your report? And at the top of the page you

say,

"There are still data gaps that keep the price

of gasoline and diesel in British Columbia

"opaque"."

And there's a narrative. And then you say in bullets

towards the middle of the page, you refer to a number

of additional unknowns.

MR. WOLINETZ: A: Mm-hmm.

MR. AHMED: Q: And the first one there is,

"…The specific slate of crude oils used by

refiners."

MR. WOLINETZ: A: Yeah.

MR. AHMED: Q: And the second one is,

"…Actual transport costs by unregulated modes,

such as boat, rail, truck…"

MR. WOLINETZ: A: Correct, yeah.

MR. AHMED: Q: And there could easily be hundreds of

different agreements that cover transportation to and

from a refinery in any given year, right?

MR. WOLINETZ: A: I imagine, yeah.

MR. AHMED:: Q: And the trucks could be coming from or

going to any number of locations?

MR. WOLINETZ: A: They could be, yeah.

MR. AHMED: Q: Easily dozens of locations.


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MR. WOLINETZ: A: Yeah, as you imagine. I mean, if

they're going to retail locations, there are many

retail locations. So, yeah.

MR. AHMED: Q: And presumably the cost for all the

truck shipments could vary depending on the trucker

that's used?

MR. WOLINETZ: A: I imagine they have contractual

agreements. So yeah, if you had different companies

or different owner operators even, then it could vary,

yeah.

MR. AHMED: Q: And the cost for the truck shipments

could vary on the timing as well?

MR. WOLINETZ: A: I can't speak to that, I don't know

enough about the trucking industry.

MR. WOLINETZ: Q: It's possible that the seasonality

could affect it or you just don't know?

MR. WOLINETZ: A: I can't speak to that as an expert in

any way, no.

MR. AHMED: Q: And similarly there could be a large

number of marine shipments coming through with various

prices and terms, right?

MR. WOLINETZ: A: I would expect this to be different

than trucking. The reason being the marine shipments

are probably going to wholesale terminals. And so

that would be, generally, I would expect

transportations from refineries in Washington State to


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a very small number of wholesale terminals. So it

could be that you would have one operator in that

case. I would expect there to be fewer transporters

involved as opposed to the trucking. But again, I

can't speak to that with certainty, I don't know.

MR. AHMED: Q: Well there may be fewer, but wouldn't

they vary depending on where they're coming from?

MR. WOLINETZ: A: They would be coming from the

refineries in Washington. So fairly limited locations

they'd be coming from.

MR. AHMED: Q: But at different places, the refineries

are at different places?

MR. WOLINETZ: A: Yeah. So I mean you could have the

Cherry Point refineries or you could have something

come from further down Puget Sound. It's not like

they're necessarily coming from -- pardon me, sorry?

MR. AHMED: Q: Sorry, and there could be other changes.

The weather could change, it could delay the shipment?

MR. WOLINETZ: A: So I can't speak to that. I don't

have that expertise.


MR. AHMED: Q: And similarly there could be varying

prices in terms of rate --

MR. WOLINETZ: A: I would expect that, yes.

MR. AHMED: Q: And the third bullet you have there are,

"…The business costs of refining, wholesaling


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and retailing, aside from petroleum crude and

product input costs."

And there could be a number of costs and related

agreements in there, right?

MR. WOLINETZ: A: Yeah, absolutely. I mean, included

within there could be labour. And labour costs could

be broken down amongst a number of different unionized

or ununionized groups. So of course there could be

multiple different costs, even just within that group.

MR. AHMED: Q: Yeah, and taking just the refining

costs, that could also include things like energy

supply cost to run the refinery?

MR. WOLINETZ: A: Yes it would.

MR. AHMED: Q: And you've talked about employment

already. There'd also be benefits that come with

that?

MR. WOLINETZ: A: Yeah, as a category of employment, I

would think that that would.

MR. AHMED: Q: Maintenance costs for the refinery?


MR. AHMED: Q: Similarly, the business costs of

retailing could include things like power to run the

store?

MR. WOLINETZ: A: Yes, it would. That would probably

be a relatively minor cost in the overall price of

gasoline. But yeah, that would be there as well.


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MR. AHMED: Q: Land costs?

MR. WOLINETZ: A: Depending on the ownership model,

yeah there could be land costs.

MR. AHMED: Q: You already refereed to staffing costs,

that would apply at the retail level as well?

MR. WOLINETZ: A: Of course, yeah.

MR. AHMED: Q: Machinery and equipment costs?

MR. WOLINETZ: A: Sorry, mm-hmm.

MR. AHMED: Q: Capital costs of facilities that are on

the land as well?

MR. WOLINETZ: A: Yes.

MR. AHMED: Q: Advertising or branding costs incurred

by or allocated to the retailer?

MR. WOLINETZ: A: I'm not sure to what extent gasoline

retailers do advertise, but if they did then it would

be a cost, yeah.

MR. AHMED: Q: Things like the landscaping of the

retail location could be a business cost of retailing

as well?

MR. WOLINETZ: A: Of course it would.

MR. AHMED: Q: Even agreements with the convenience

store suppliers that provide the candy bars, snacks

and other items would be a business cost of retail,

wouldn't they?

MR. WOLINETZ: A: Yes, they would.

MR. AHMED: Q: Now turning back to the bullets on page


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11, the last two are,

"…The specific supply agreements between various

market players…"

And,

"…Renewable fuel procurement and handling

costs…"

And it goes on to describe them a little more

specifically.

Would you also agree that there could

easily be hundreds, if not more, such agreements and

costs for a market player in any year?

MR. WOLINETZ: A: Yeah, for any market player there are

a multitude of business costs, that's correct.

MR. AHMED: Q: So are you suggesting that a possibility

is that market participants should provide these

hundreds or more documents to a regulator and the

regulator should then go through and audit them?

MR. WOLINETZ: A: I didn't say that within this, no.

MR. AHMED: Q: But they're supposed to provide them?

MR. WOLINETZ: A: Did I say that they should provide

these?

MR. AHMED: Q: Well, you mentioned these as one of the

additional unknowns, all of these items.

MR. WOLINETZ: A: Sure, but saying that they're unknown

doesn't necessarily suggest that I said that all of

these multitudes of costs should be reported.


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MR. AHMED: Q: So you're just saying they exist?

MR. WOLINETZ: A: I'm saying they exist. And the

reason I say they exist is because even if you have

regulations, such as they've had in Hawaii and

California, they are going to be aspects of business

costs that remain opaque.

Something I did deal with in the report

when talking about the case of Hawaii and California

is even with their enhanced transparency you cannot

individually pinpoint the business costs and the net

margins of every single player. But it's not

necessarily a condemnation of enhanced transparency,

but it's a realistic interpretation of what you can

hope to achieve.

So you've just gone through a number of

cost items that would apply to many different players.

Many of those cost items are going to be relatively

small compared to the price of fuel. But obviously

they're costs that need to be recuperated by

sustainable business. But in no way did I suggest

that all of those costs have to be reported. And you

don't necessarily need all of those costs in order to

better understand the market.

If you were to have all of them and enough

time to analyze them, you could then calculate with

accuracy the net margins. But that's not what's


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happened in Hawaii or California and I don't think

that's necessarily what's realistically going to

happen in any other jurisdiction.

MR. AHMED: Q: Because there's just so much?

MR. WOLINETZ: A: Yeah, there's a lot. But uncertainty

and difficulty of analysis in any realm doesn't

preclude trying to better understand something.


MR. AHMED: Q: Now, there are 13 provinces and

territories in Canada?


MR. AHMED: Q: And 50 states in the U.S.

MR. WOLINETZ: A: There are, yes.

MR. AHMED: Q: So by that measure there are 63

jurisdiction in Canada and the United States.

MR. WOLINETZ: A: Okay, yes.

MR. AHMED: Q: And none of them have adopted

transparency regulation to the extent that's

identified in those bullets, right?

MR. WOLINETZ: A: No, they haven't. So the only

jurisdictions with significant transparency

regulations would be Hawaii and California, and they

don't go into that level of detail. Generally they're

looking at the market players, the volumes that they

are gathering or taking as inputs, what their outputs

are, the products they are taking as inputs, and the


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products that are outputs.

MR. AHMED: Q: And I'd like to talk about those

jurisdictions in a little bit more detail.

MR. WOLINETZ: A: Sure.

MR. AHMED: Q: And you mentioned Hawaii. They perhaps

went the furthest, if I'm understanding it, and their

data collection is a vestige of a failed attempt at

price regulation and it doesn't go as far as the

bullet points, right?

MR. WOLINETZ: A: It does not go as far as the bullet

points, yeah. And failed regulation, to be clear

their regulation was removed because of political will

to do so. There was no analysis specifically

demonstrating that it -- I guess what I'm trying to

say here is you would have to define what you mean by

"failed" in order for me to say, yes, it's a failed

regulation. But it's a regulation that no longer

exists and this price transparency is what's left over

from that.

MR. AHMED: Q: And it was eliminated after less than a

year, I understand?

MR. WOLINETZ: A: That's correct, approximately eight

months I believe.

MR. AHMED: Q: Yeah. And in the 13 years since it was

abandoned it hasn’t been retooled and brought back in

another form?


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MR. WOLINETZ: A: It has not, no.

MR. AHMED: Q: So going to your report, now you

describe Hawaii at page 12 and there's a footnote

there. The footnote is referring to -- and correct me

if I'm wrong, it's a webpage from the Hawaii

government. And that's the first document, we can

provide that if you -- I think it would be helpful to

put that up.


MR. AHMED: I believe we're at C5-11 if it should be

marked.

(DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT &

TOURISM - ENERGY INDUSTRY INFORMATION REPORTING

PROGRAM, MARKED EXHIBIT C5-11)

MR. AHMED: Q: So, Mr. Wolinetz, that's what you get

when you click on that footnote. Have you seen that

webpage before?

MR. WOLINETZ: A: Yes, I have. And so the second major

heading reporting forms provides the instructions that

people are to use when reporting, as well as the forms

that they have to fill out.

MR. AHMED: Q: Yes. And I'd like to get to that in a

moment.

MR. WOLINETZ: A: Okay, sure.

MR. AHMED: Q: But I wanted to first draw your

attention to the first bullet, the first of the three


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bullets in the middle there. And it says, "2010 EIIRP

Reporting Schedule "A"." And perhaps we could also

have that as well. We've got a printout of that for

you.


(DBEDT, SCHEDULE "A", 2010-2011 MONTHLY FILING

DEADLINES, MARKED EXHIBIT C5-12)

MR. AHMED: Q: And, Mr. Wolinetz, in preparing your

report did you look at this?

MR. WOLINETZ: A: The specific deadlines for filing?

No, I did not.

MR. AHMED: Q: All right. And you see at the top this

is called Schedule "A", 2010-2011 Monthly Filing

Deadlines?


MR. AHMED: Q: It says, "All monthly reports are due at

4:30 p.m.," I assume HST is Hawaii Standard Time, "on

respective of filing deadlines." You go through the

table and there are a number of columns. The first

says, "Report beginning first of month," the second

one says, "Report ending last of month," and then

there's a filing deadline in the third column over.


MR. AHMED: Q: And it goes from -- the filing deadlines

go from August 31, 2010 and they carry on on a monthly

basis to August 31, 2011. So it looks like the last


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date is August 31, 2011?

MR. WOLINETZ: A: The date indicated on this chart? Or

you're trying to ascertain if this transparency is

still active? Is that --

MR. AHMED: Q: Yeah, are you sure that reporting is

still required under this program?


MR. WOLINETZ: A: That’s my understanding. To be

honest it’s not actually all that relevant to what I

was writing about in this report, which was to provide

a primer on both price regulation and transparency

measures that have been used in recent history in

North America. So if for some reason the Hawaii

program is no longer active, it’s still part of the

information and history that I would have been

bringing forward into the report.

MR. AHMED: Q: So you’re not aware if there are further

reporting days that were established beyond 2011?

MR. WOLINETZ: A: It’s my understanding that they are.

MR. AHMED: Q: But you didn’t find them during the

course of your research?

MR. WOLINETZ: A: As I said, it’s not actually relevant

to the report I wrote whether it’s active or not, so

long as it’s something that has been used recently.

So in fairness I can’t tell you with certainty if it’s

still active, but it’s my understanding that it is.


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MR. AHMED: Q: Perhaps rather we can look at the

content of what they -- the EIIRP reports look like.


MR. AHMED: Q: And that’s the third bullet in the

middle, and we’ve got that document as well. So this

is the reporting form instructions that you may word

plays in Hawaii, anyways.

THE HEARING OFFICER: C5-13.

(DBEDT - ENERGY INDUSTRY INFORMATION REPORTING PROGRAM

("EIIRP") INSTRUCTIONS MARKED EXHIBIT C5-13)

MR. AHMED: Q: Have you seen this document before, Mr.

Wolinetz?

MR. WOLINETZ: A: These are the -- yeah, these are the

instructions. I have looked at this. I haven’t read

it in great deal.

MR. AHMED: Q: Did you look at it in preparing your

report?

MR. WOLINETZ: A: Yeah, I did.

MR. AHMED: Q: Do you need some more time to look at

it? I’d like to walk through it for --

MR. WOLINETZ: A: Sure, let’s walk through it.

MR. AHMED: Q: Unfortunately it’s not page numbered,

but what I can do is walk us through with the titles.

So the first page is just the cover. It says, “Energy

industry information on the reporting program

("EIIRP") instructions.”


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MR. AHMED: Q: And this is from a government department

in the state of Hawaii.


MR. AHMED: Q: And it says in the bottom left corner

there, “Effective July 1, 2010. Revised August 16,

2010.”

MR. WOLINETZ: A: Okay, yeah.

MR. AHMED: Q: So almost nine years ago. It doesn’t

seem like there’s been a further revision since then?

MR. WOLINETZ: A: Not that I know of.

MR. AHMED: Q: Now, the second page basically tells you

just how to fill out the form, how to describe the

party that fills it out.


MR. AHMED: Q: And the next page in, the one that

says, “Certification,” the first bullet, it describes

how to submit the report and related details, right?

MR. WOLINETZ: A: Okay, yeah.

MR. AHMED: Q: And then at the bottom, I think you

referred to this, it talks about confidentiality, and

it’s the last section there in bold and underlined it

says, “Provisions regarding confidentiality of

information.” And it says,

"Information reported on Form R-001 will not be

publicly released in company or individually


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identifiable form and will be protected from

disclosure in identifiable form, pursuant to…"

the Hawaiian statue.


MR. AHMED: Q: That makes sense to you?

MR. WOLINETZ: A: Yeah. Perfect sense. It’s

consistent with everything I know about this program

regulation.

MR. AHMED: Q: Not surprising that that kind of

protection is provided for market participants?

MR. WOLINETZ: A: No, absolutely not. In fact I did

look at the critiques Dr. Kahwaty had on my work and

it was one of the things he raised that making

information transparent to all of the firms involved

in the market could have negative impacts in

competitiveness. I in fact agree with him whole-

heartedly. And again, in the report I was nowhere

suggesting that transparency involves making the

information gathered public to all parties.

MR. AHMED: Q: And the next page over is schedule "A".

That seems to me to be the same as the document that

we looked at already. Right?


MR. AHMED: Q: Okay. The next page is titled, “General

instructions, Form DBEDT” and this is dash 110, 111,

120, 130, 140, 301 and these are basically general


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instructions for the forms. Who fills them out, when

and how, right?



MR. AHMED: Q: And it continues over the page, and

then this is the page that starts, "General

instructions," and the second from last paragraph,

again, has provisions regarding confidentiality of

information as we already discussed.


COMMISSIONER DOEHLER: Just to make it clear, I seem to

have the time when the reporting requirements are in

here as my next page. I guess that's a copying error?

MR. AHMED: Sorry, Mr. Doehler. So --

COMMISSIONER DOEHLER: So the general instructions is

not my next page. Do you have this one next?

THE CHAIRPERSON: No.

COMMISSIONER DOEHLER: Okay. I've got the special

copy.

THE CHAIRPERSON: You've got a special copy.

COMMISSIONER DOEHLER: We're on the general

instructions.

THE CHAIRPERSON: Okay, we're ready.

MR. AHMED: Pardon me, my apologies that this wasn’t --

there are two pages of general instructions and it's

helpful it's there -- it says at the bottom of the


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page in the footer, "General instructions," so there

are two pages.

THE CHAIRPERSON: We've only got one page of general

instructions.

COMMISSIONER DOEHLER: Oh, I've got two pages. I do

have the special copy.

THE CHAIRPERSON: It's okay. Please continue.

MR. AHMED: I think the point was made.

Q: So the general instructions, there's a Part 1

that says, "Respondent identification", part 2,

"Submission". So it talks about who puts what in and

when. And that's kind of the generic form that any

reporter fills out under this scheme. So part 1 and

part 2 are consistent regardless of what kind of

market participant you are, whether you're a refiner,

a wholesaler, or something else.

MR. WOLINETZ: A: Okay.

MR. AHMED: Q: And then the next page, hopefully

everyone has that starts, "Form DBEDT-110," says,

"Monthly petroleum imports report instructions." Do

you have that? And presumably this is for imports.

COMMISSIONER DOEHLER: I do.

MR. AHMED: You do? Excellent.

COMMISSIONER DOEHLER: I've got the special copy.

THE CHAIRPERSON: We've all got it.

MR. AHMED: You've all got it, excellent.


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Q: And this is information for reporters, this is

what reporters fill out. Mr. Wolinetz?

MR. WOLINETZ: A: This is information for people

reporting? Yeah, it looks to be that way. So product

description, port of entry, volume, these are the

kinds of things that are reported under that

regulation. This looks to me like what they are meant

to be reporting.

MR. AHMED: Q: For an importer?

MR. WOLINETZ: A: For an importer.

MR. AHMED: Q: Yeah. Location, product, origin,

volume, right?


MR. AHMED: Q: Doesn’t ask for costs.

MR. WOLINETZ: A: No, it does not.

MR. AHMED: Q: It doesn't ask for commercial

agreements.

MR. WOLINETZ: A: It does not, no.

MR. AHMED: Q: And, again, at the bottom the

protections for confidential information are noted.


MR. AHMED: Q: And then the next one over, this is Form

DBEDT-111, this is I guess the sibling of the previous

one. This is for exports, this is the export report,

right?

MR. WOLINETZ: A: Yes, it is.


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MR. AHMED: Q: So it's for product going the other way?


MR. AHMED: Q: And basically, again, it asks for

location, product, destination, and volume.

MR. WOLINETZ: A: Correct, yeah.

MR. AHMED: Q: Doesn’t ask for costs?

MR. WOLINETZ: A: Does not, no.

MR. AHMED: Q: Doesn’t ask for commercial agreements.

MR. WOLINETZ: A: No, it doesn't.

MR. AHMED: Q: And, again, protections for confidential

information are noted at the bottom.

MR. WOLINETZ: A: Yes, they are.

MR. AHMED[The next page is form DBEDT-110 -- or sorry,

pardon me, 120, and this is monthly terminal reports.

And basically it asks for location and product

inventory, right?

MR. WOLINETZ: A: Yes, it does.

MR. AHMED: Q: And, again, it doesn't ask for costs?


MR. AHMED: Q: It doesn’t ask for commercial

agreements?


MR. AHMED: Q: And, again, protections for confidential

information are noted.


MR. AHMED: Q: And the next one over is form DBEDT-130


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and these are monthly retail and wholesale

transactions report instructions. And now a number of

different kinds of transactions are described here,

like sales for residential purposes, for agricultural,

military purposes, government and other purposes, but

it looks like all that's being asked for is, again,

location, product, and volume, right?

MR. WOLINETZ: A: Yes, it is, yeah.

Proceeding Time 10:13.m. T07

MR. AHMED: Q: Doesn't ask for costs.

MR. WOLINETZ: A: No, it doesn’t ask for costs.


agreements?

MR. WOLINETZ: A: No, it doesn’t.

MR. AHMED: Q: And again protections for confidential

information are noted at the bottom?


MR. AHMED: Q: That was, I guess, a two-page report on

the form. Then next one starts, it says at the top,

it says, “DBEDT-140” and this is monthly refinery

report instructions. And basically it asks for

location, product and volume, right?


MR. AHMED: Q: It doesn’t ask for costs?




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agreements?

MR. WOLINETZ: A: No.

MR. AHMED[And again protections for confidential



MR. AHMED: Q: We’re getting towards the end of Hawaii

anyways. These are, the next one over is Form 301,

Monthly storage facility report instructions. And

basically again it asks for location, tank specs,

product, volume and transport method, right?


MR. AHMED: Q: It doesn’t ask for costs?



agreements?


MR. AHMED: Q: And again protections for confidential



MR. AHMED: Q: And just for completeness, the last four

pages are product type definitions.


MR. AHMED: Q: Now, moving on to California. In your

report you say that data collection in Hawaii under

the EIIRP initiatives were inspired by California’s

data collection, right?


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MR. WOLINETZ: A: Yeah, and this is something noted by

the Hawaii Public Utilities Commission.

MR. AHMED: Q: You don’t mention the filing of any

commercial agreements in California in your reporting?

MR. WOLINETZ: A: No, I don’t.

MR. AHMED: Q: And you don’t say the reporting

information is made public in California either?

MR. WOLINETZ: A: No, I don’t. That's my understanding

that it's not. It’s filed through the California

Energy Commission, which is used in confidence.

MR. AHMED: Q: And there are a number of forms in

California. I don’t want to go through all of them,

but I think there are three that we’ll maybe walk

through and hand out if that’s all right. They are

refinery ones.


MR. AHMED: Q: There’s a weekly one, a monthly one and

an annual one. You are aware of that?

MR. WOLINETZ: A: No, I was not in fact they had

weekly, monthly and annual.

MR. AHMED: Q: All right. Well, we can provide them to

you if you want to have a look.

MR. WOLINETZ: A: I was under the understanding that --

I thought it was a monthly form, but --

MR. AHMED: Perhaps they could be marked collectively?

THE HEARING OFFICER: Marked C5-14.


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(THREE CALIFORNIA ENERGY COMMISSION REPORTING FORMS

MARKED EXHIBIT C5-14)

MR. AHMED: Q: So there should be three documents

there. The first one is the California Weekly

Refinery Production and Stock Report. Another is the

California Monthly Report and that’s just a two-page

document. There’s something on the second side. And

then the third one is the California Annual Report and

perhaps we can look at the weekly one for a moment

first.


That seems to basically call for company

name and information, refiner name and information and

production stocks, right?


MR. AHMED: Q: There’s no business cost reporting?

MR. WOLINETZ: A: No, there’s not.

MR. AHMED: Q: No filing of commercial agreements

listed?

MR. WOLINETZ: A: No, there’s not.

MR. AHMED: Q: And there’s a confidentiality noted at

the bottom. This is different than the Hawaiian

language, but again there’s a note about

confidentiality. It says,

"This report contains proprietary and trade

secret information and is customarily treated as


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confidential by this company."

And then the next one is the California

monthly report and that’s the two-pager. And this one

has a little bit more information as far as I can

tell. Take a moment to look at it if you need it.

This calls for product volume and prices as far as

basically retail and wholesale prices, right?


MR. AHMED: Q: And again over the second page there’s a

confidentiality note as well, right?

MR. WOLINETZ: A: Yes, there is.

MR. AHMED: Q: And then the third one for the

California Annual -- California Refiner Annual Report,

that’s CEC Form A04. This calls for company

identification information and supply method

basically, right?

MR. WOLINETZ: A: Yeah, a matrix of product by how it’s

being shipped essentially.

MR. AHMED: Q: So now business costs reporting?

MR. WOLINETZ: A: No, there are none.

MR. AHMED: Q: No requirement to file commercial

agreements?


MR. AHMED: Q: And there’s the confidentiality clause

again at the bottom, right?

MR. WOLINETZ: A: Yes there is.


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MR. AHMED: Q: So moving north to Washington State, you

also described price transparency in Washington State

in your report, right?

MR. WOLINETZ: A: I did, yeah.

MR. AHMED: Q: And you mentioned two items, right?


MR. AHMED:: Q: And the first is a quarterly gasoline

report.

MR. WOLINETZ: A: Yeah, that’s correct.

MR. AHMED: Q: And you’ve got a footnote 11 in your

report. This is the Quarterly Gasoline Report here

you’re referring to? I followed the link. We’ve got

copies as well.

MR. WOLINETZ: A: Sure, right.


(WASHINGTON STATE, OFFICE OF THE ATTORNEY GENERAL,

WASHINGTON STATE QUARTERLY GASOLINE REPORT MARKED C5-

15)

MR. AHMED: Q: Have you had a chance to review that,

Mr. Wolinetz?


MR. AHMED: Q: And you say in the Navius report that

the Washington Quarterly Gasoline Report uses public

information to communicate to consumers the factors

that contribute to gasoline prices?

MR. WOLINETZ: A: Yeah, it’s a completely different


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kind of function than these California and Hawaii

programs that we have been looking at.

MR. AHMED: Q: And in fact the purpose is stated in the

second paragraph. It says,

"This report is produced by the Washington

Attorney General’s Antitrust Division…"

Pardon me, I’ll start over.

"This report produced by the Washington Attorney

General’s Antitrust Division provides

information to help consumers understand the

many factors that contribute to our current gas

price situation.”

MR. WOLINETZ: A: Yes, that’s what it says.

MR. AHMED: Q: And the first heading there is “Price

regulation in a free market."


MR. AHMED: Q: And it goes on to note that,

"Gasoline is not a regulated commodity, which

means that producers and retailers are free to

charge whatever price for their product they

choose, so long as they do not collude or engage

in unfair and deceptive practices.”

MR. WOLINETZ: A: That’s correct.

MR. AHMED: Q: That doesn’t describe the cost of market

participants --

MR. WOLINETZ: A: No, absolutely not.


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MR. AHMED: Q: -- in that section. It doesn’t describe

commercial agreements of market participants in that

section.


MR. AHMED: Q: And you agree this is all information

that’s in the public domain?


MR. AHMED: Q: Nothing that would be confidential under

that heading?

MR. WOLINETZ: A: Under that heading, yeah, no.

MR. AHMED: Q: The second heading is, “Actions taken by

the State Attorney General to ensure competitive

marketplace.” It talks about what the Attorney

General of Washington State has done over the last 30

years or so, largely related to mergers.


MR. AHMED: Q: And you agree that’s all information

that’s likely in the public domain?

MR. WOLINETZ: A: Yes, I agree.

MR. AHMED: Q: The next section is really just a

general statement about what the Attorney General and

other state Attorneys General do, right?


MR. AHMED: Q: And then there’s another section that

says, “Major factors affecting gasoline prices in

Washington.”


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MR. AHMED: Q: The first one is listed -- there are a

number of items -- the first one is,

"Increased demand and limited capacity leave no

room for error or disruption in the supply

system."

Do you see that?

MR. WOLINETZ: A: I do see that.

MR. AHMED: Q: And it says,

"The West Coast is a unique market in the United

States in terms of supply, demand, and

production of gasoline. As a result, the

average price of gasoline tends to be higher

than other areas of the country.”



MR. AHMED: Q: The second factor that's mentioned is

zone pricing, and that’s of geographic considerations,

right?


MR. AHMED: Q: The third is retail margins?


MR. AHMED: Q: And the fourth are other considerations

and there are a number of bullets there, right?


MR. AHMED: Q: And those bullets are, "The price of


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crude oil."


MR. AHMED: Q: “Low gasoline inventory.”


MR. AHMED: Q: “The price of gasoline additives.”


MR. AHMED: Q: “Political unrest.”


MR. AHMED: Q: “Seasonal shift in gasoline blends.”


MR. AHMED: Q: Nothing you’ve seen as we continue to go

through this described commercial arrangements of any

particular market participants?


MR. AHMED: Q: This is all information that’s in the

public domain. You’d agree?

MR. WOLINETZ: A: I agree.

MR. AHMED: Q: Now, the next section notes that, one

way to reduce demand is to reduce consumption.


MR. AHMED: Q: Again all public information? Oh, I

skipped one. That was the, “What can consumers do?”

section. There’s also the, “What does the cost of a

gallon of gas go to” section and that just talks about

taxes, right?



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MR. AHMED: Q: And then that’s pretty well the end of

the document and we’ve got some photos and links.


MR. AHMED: Q: So looking at this document as a whole,

it’s basically a backgrounder or frequently asked

questions sheet, isn’t it?

MR. WOLINETZ: A: Primarily. I mean, it’s explaining

to a layperson how gasoline prices are formed.

THE CHAIRPERSON: Excuse me. Can I just ask also a

clarifying question?

MR. AHMED: Of course, Mr. Chair.

THE CHAIRPERSON: So this document to the best of both

of your knowledge would have been posted in 2008?

We’re looking at a document that was written and

posted in 2008. Is that correct?

MR. AHMED: To my knowledge this would have been posted

in 2019 if it’s a quarterly report. But all, it’s in

the Navius report, so I’ll let the Navius expert --

THE CHAIRPERSON: The Navius report says, “The State of

Washington, 2007 to 2008 Gas Price Study”, so is that

what we’re looking at?

MR. WOLINETZ: A: That’s a separate document. Right

now they produce a quarterly report communicating to

consumers. In 2007 and 2008 they commissioned a study

to look in detail at that.

THE CHAIRPERSON: Okay, and as a result of that they do


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this every quarter.

MR. WOLINETZ: A: Yeah, that’s my understanding. This

is something that has followed from that in order to

try to, I guess, communicate what they learned in that

study and update that information to consumers.

THE CHAIRPERSON: Okay. Thank you.

MR. AHMED: Q: And that 2007-2008 study is the next

document. We’ll be going to that afterwards, but it’s

-- but just sticking with the quarterly report for a

moment; as far as pricing costs go there isn’t

anything you wouldn’t find in there in a public

source?


MR. AHMED: Q: And have you reviewed most of the

materials that have been filed in this proceeding?

MR. WOLINETZ: A: Specifically for this session or the

proceeding overall?

MR. AHMED: Q: The proceeding as a whole and

specifically the staff filings?

MR. WOLINETZ: A: No, I have not.

MR. AHMED: Q: Okay. I think we’ll pass up -- there’s

three documents I’d like you to look at.

MR. WOLINETZ: A: For sure.

MR. AHMED: Q: The first one has already been marked.

It is Exhibit A2-14 and it’s a document from the

Competition Bureau of Canada called “Factors That


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Affect Prices at the Pumps.”

I think the issue may arise because the

staff filing just has a hyperlink and so we have the

content of the page. And I’d just like to walk

through the headings of this document pretty quickly.


MR. AHMED: Q: I don’t think we need to go through with

as much detail as the Washington Quarterly Report.

But there are a number of headings. They say, “Gas

stations often match each other’s prices.” And

there’s an explanation. “Gas prices can change

quickly,” and then there’s the explanation. Do you

see that?


MR. WOLINETZ: A: I do, yeah.

MR. AHMED: Q: “Gas prices can be higher in some parts

of Canada” and then there’s an explanation.


MR. AHMED:: Q: And “Differences between Canadian and

American gas prices.” And there’s an explanation.


MR. AHMED: Q: And it says,

"The prices of gasoline, crude oil, diesel fuel

and home heating oil don’t always rise and fall

together."



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MR. AHMED: Q: And that’s the end of that document.

I’d like to, another staff filing that we

have, I’d like to pass up. That’s A2-15 and this is

also from the Competition Bureau of Canada. It’s

titled A Guide to Retail Gasoline Pricing in Canada.

COMMISSIONER DOEHLER: My binder includes that.

MR. AHMED: Q: Have you had a chance to review the

document?

MR. WOLINETZ: A: Yes, I have.

MR. AHMED: Q: And you’d agree it describes the

Competition Bureau's role in examining the market?


MR. AHMED: Q: Regulating the market?


MR. AHMED: Q: And again there’s a number of questions

and they are answering them. Things like “Why does

the price of gas vary from region to region?” Do you

see that on page 6?

MR. WOLINETZ: A: Page 6. Yes.

MR. AHMED: Q: And another question and answer on page

7, “Why do gas prices seem to move in unison? Isn’t

that illegal?”

MR. WOLINETZ: A: I do see that, yeah.

MR. AHMED: Q: Page 8, “What causes drastic swings in

the retail gasoline prices?”



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MR. AHMED: Q: There’s another heading and a

description about differences in gasoline prices

between Canada and the U.S.

MR. WOLINETZ: A: Yeah, I see that.

MR. AHMED: Q: And later on a description of "Why do

retail gasoline prices seems to go up before the long

weekend?"

MR. WOLINETZ: A: Yeah, I see that.

MR. AHMED: Q: And then a number of other questions and

answers. Do you see those?

MR. WOLINETZ: A: I see those.

MR. AHMED: Q: The final one of the staff filings I

want to go to is A2-17 and this is a document from the

Natural Resources Canada titled Why Gasoline Prices Go

Up and Down? And you see there are a number of

headings, questions with narrative answers as well.

MR. WOLINETZ: A: Yeah, correct.

MR. AHMED: Q: “Why am I paying so much for gasoline?

MR. WOLINETZ: A: I see that.

MR. AHMED: Q: “Why not just make more gasoline so

prices will go down?”

MR. WOLINETZ: A: I see that, yeah.

MR. AHMED: Q: “What goes into the price I pay for

gasoline?”


MR. AHMED: Q: “Why do the prices of gasoline and other


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fuels seem to change so often?”


MR. AHMED: Q: “Why do gasoline prices vary from region

to region?”



MR. AHMED: Q: You have to say yes or no.


THE CHAIRPERSON: Mr. Ahmed, I assume that we’re

getting to a question about the report here.

MR. AHMED: We are.


MR. AHMED: Q: And you’ll see there are further

headings there asking about long weekends, prices of

gas?

MR. WOLINETZ: Q: I do see that, yes.

MR. AHMED: A: Would you agree with me that the

information that we’ve looked at in these three

Canadian documents is in essence the same as what

appears in the Washington State Gas Quarterly Report?

MR. WOLINETZ: A: I would agree that the substance of

what these are trying to do is the same. It’s trying

to educate consumers as to how gasoline prices are

formed.

MR. AHMED: Q: They are all basically backgrounders or

information sheets for the layperson I believe.


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MR. WOLINETZ: A: Yeah. So one thing that’s missing

from these Competition Bureau of Canada reports and

the other Canada reports is it’s not talking about

specific market conditions, whereas the Washington

report talks about the circumstances of say the West

Coast market, whereas these are very general. They

don’t talk about geographic markets in any sense.

MR. AHMED: Q: Point taken. They’re actually more

national and --


MR. AHMED: Q: All right. The last document I’d like

to ask you about is the Washington State 2007/2008

Report, and that’s the second transparency measuring

Washington State that you referred to in your report

at page 13.



(WASHINGTON STATE 2007-08 GAS PRICE STUDY, FINAL

REPORT MARKED EXHIBIT C5-16)

MR. AHMED: Q: Have you reviewed this report before?

MR. WOLINETZ: A: Yeah, I’ve read the summary.

MR. AHMED: Q: And this study was prepared by the

Washington State Attorney General’s office, correct?

MR. WOLINETZ: A: Specifically it was prepared for them

by the consulting economist I presume who’s the

author, yes, correct.


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MR. AHMED: Q: But it’s put out by the Attorney

General’s office?


MR. AHMED: Q: And this report was prepared after a

year long investigation into gas prices, correct?

MR. WOLINETZ: A: Yes, correct.

MR. AHMED: Q: And you say in your report, the Navius

report, that the study uses subscription data, OPIS,

surveyed independent wholesalers, voluntariate -- it’s

in brackets so it says, "…(voluntary: who they buy

from, sell to, how they determine prices, supply

contracts, et cetera)…”

MR. WOLINETZ: A: Yeah I believe they’ve got an example

of the survey in the appendix if I’m not mistaken.

But yeah, that’s correct.

MR. AHMED: Q: They gathered stakeholder and public

comments?


MR. AHMED: Q: So in many ways that was like the

inquiry we’re here for today before the BCUC?

MR. WOLINETZ: A: Yeah, in as much as we are gathering

public comment and using public data right now, that

would be similar.

MR. AHMED: Q: But with about four times as much time

to collect the data?



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MR. AHMED: Q: And the Washington Report noted that

production capacity constraints and transport cost

were responsible for the price increases that lead to

the investigation, not price manipulation, right?

MR. WOLINETZ: A: It found no evidence of price

manipulation, that’s correct.

MR. AHMED: Q: That’s what you say in your report?


MR. AHMED: Q: And that occurred in circumstances when

Washington State refineries produced more motor fuel

than was consumed in the State?

MR. WOLINETZ: A: Yeah, so Washington’s a net exporter

so that’s not surprising.

MR. AHMED: Q: And the reason still was that there was

a lack of adequate U.S. refining capacity that led to

substantial increases in the amount of expensive

foreign gas that was being imported, right?

MR. WOLINETZ: A: I can’t answer that specifically

without looking at the report in more detail.

MR. AHMED: Q: So on page 3 of the summary.


MR. AHMED: Q: The bullet that says, “Supply

constraints are the largest contributor to

volatility.” In the second paragraph it says,

"This lack of adequate U.S. refining capacity

has led to a substantial increase in the amount


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of expensive foreign gas imported into our

region."

Do you see that?

MR. WOLINETZ: A: Yes, I agree, that’s there. That’s

their conclusion.


MR. AHMED: Q: And then it goes on to say,

"The need to import product into the West Coast

to balance demand, impacts prices in Washington.

As a consequence of the tight overall supply on

the West Coast, any glitches in the system can

cause significant price spikes.”

Did you read that?

MR. WOLINETZ: A: Yeah, I see that here.

MR. AHMED: Q: And the report found that the observed

increase in refining margins became less dependent on

crude costs, right?

MR. WOLINETZ: A: Specifically which page in in boil

print are you in now?

MR. AHMED: Q: It’s in page 14 of the report.

MR. WOLINETZ: A: Page 14 of the report. So again, I

didn’t review the specific findings of this. I

reviewed this to understand what the process was in

terms of was there some precedent of transparency set

here and how did it compare to, for example, Hawaii or

California.


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MR. AHMED: Q: Did you look at what the report said

about the refining margins?

MR. WOLINETZ: A: No, I looked at it’s overall

conclusions that they found no evidence of wrongdoing

and that they found market conditions explaining the

high prices that had triggered this investigation.

MR. AHMED: Q: Did you note that there -- that the

report found that there was a significant volatility

in refining differential over the study period?

MR. WOLINETZ: A: No, I did not read that, but it does

not surprise me because that’s not abnormal.

MR. AHMED: Q: Thank you, those are my questions.


THE CHAIRPERSON: Thank you, Mr. Ahmed.

MR. BUSSOLI: Mr. Chair, perhaps we should check to see

if there are other interveners that would like to

question?

THE CHAIRPERSON: I was just about to do that. Next on

the list is Mr. Keen, who I see is approaching.

MR. KEEN: And Shell Canada has no questions. Thank

you.

THE CHAIRPERSON: Thank you, sir. And the next on the

list is Imperial Oil. Mr. Gelbman, do you have any

questions?

MR. GELBMAN: Imperial Oil has no questions. Thank

you.


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THE CHAIRPERSON: Thank you. And Suncor? If you have

no questions, you don’t need to come up. Just, okay,

thank you. Husky?

MR. DINELEY: No questions.

THE CHAIRPERSON: Thank you. Super Save?

MR. CLARKE: No questions.

THE CHAIRPERSON: 7-Eleven?

MR. WRIGHT: No questions.

THE CHAIRPERSON: And the National Energy Board isn’t

here. Advance Biofuels is not here. And Ms. Allan

and Mr. Eliesen aren’t here. So that takes us to the

end of the list.

Mr. Bussoli, does staff have any questions?

MR. BUSSOLI: Yes, thank you, Mr. Chair.

THE CHAIRPERSON: Staff doesn’t want to lose it’s

place.

MR. BUSSOLI: Trying to make eye contract.

EXAMINATION BY MR. BUSSOLI:

MR. BUSSOLI: Q: Staff just has a couple of clarifying

questions that arose in that discussion with Parkland.

Perhaps you can briefly outline what the pros and cons

of price transparency reporting are?

MR. WOLINETZ: A: Sure. So the cons are obviously that

it requires work on the part of multiple parties. So

you would have to have analysts who are hired to

analyze the data. And then you would be requiring the


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regulated parties to report the data as well. So

there’s an administrative burden on them as well.

The pros would be while it wouldn’t give

perfect information as to how prices would form, it

would provide quite a bit more information than is

available publicly. So again what’s available

publicly is fairly basic. You know the price of

certain crude oils and most often it’s just a

benchmark crude oil. For example West Texas

Intermediate. And you would have some sense of the

product prices and wholesale prices.

So the advantage of transparency is you

would start to get a sense of what the actual volumes

involved are there. One thing that would do is that’s

not available publicly is you’d start to get a sense

of what actually past utilization is.


Right now we can only look at a refinery or

a pipeline or a terminal and say, “Oh it can produce X

barrels per year. It can produce or hold this many

barrels." Not even all that’s necessarily easily

found in the public domain, but with price

transparency you would be able to actually know what

the capacity utilization is. So if a refinery can

produce 100,000 barrels per year, is it doing that or

is it only producing 8,000 barrels per year.


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That gives you quite a bit of information

on the market if you are having discussions about

whether there are supply constraints. Right not based

on what’s in the public domain is just primarily

conjecture. You can look at pipeline utilization and

that’s about it and the rest of it is more or less

anecdotal. People saying, “Oh, this refinery is

operating full out.” So we have no idea.

With price transparency one thing that you

could rule out -- and it’s not something I mentioned

in my market conditions to look for because those are

based on things that are available for people to

actually know right now, but it’s this idea of with

holding supply.

If you have volume data, you’d start to

have a much better understanding of whether people are

supplying as much as they possibly can to the market

or whether there’s additional supply that could be

brought to bear. So that’s something you don’t know

right now, but if you were reporting and had greater

transparency on volumes, you would have a better sense

of that.

Right now with what is publicly known, you

can estimate refining margins and distribution and

marketing margins, but you don’t know them with

certainty. So, for example, Kent Marketing reports


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for refining and distribution markets. But those are

based on a slate of crude oils typically provided to

the region and they are based on the retail sales that

they gathered and I do believe they do weekly surveys.

So in the case of California, if you were reporting

prices that people are actually selling from

wholesaler to retailer, it would give you additional

information to better estimate those refining margins

or distribution margins. So those are the advantages.

MR. BUSSOLI: Q: Okay, thank you. And then one final

question. I think you were getting there with one of

your responses earlier, but didn’t quite make it. Are

there any concerns if B.C. was to have sort of price

transparency with surrounding jurisdictions or are

there any that don’t have that?

MR. WOLINETZ: A: Concerns if B.C. had enhanced

transparency and say Washington State doesn’t?

MR. BUSSOLI: Q: Yeah, or Alberta?

MR. WOLINETZ: A: I don’t have any concerns. I don’t

know of any concerns.

MR. BUSSOLI: Q: Any sort of -- if there was a -- if

B.C. had a reporting regime and the others didn’t, the

other neighbouring jurisdictions did not?

MR. WOLINETZ: A: Okay. Sorry.

MR. BUSSOLI: Q: Go ahead.

MR. WOLINETZ: A: Okay, so are you -- I mean, if you


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have -- I’ll speak more broadly about policies that

add costs to businesses. If you have an asymmetric

policy that makes it more expensive to do business in

one region versus a neighbouring jurisdiction, I guess

there’s a concern that you could have flight of

industry. But in this case it would be fuel suppliers

to B.C. that would have to report.

So I wouldn’t be concerned that, for

example, we would suddenly have fewer retail locations

in British Columbia or that you would lose the

refinery and it would move to say Washington or

Alberta because of this, because those refineries

supplying B.C. would then also presumably have to be

subject to the same transparency regulations.

MR. BUSSOLI: Right. Thank you. Those are all the

questions.


COMMISSIONER COTE: You talked about Hawaii being

regulated for a period of, was it eight months I

believe?

MR. WOLINETZ: A: It was eight months I believe. Less

than a year I think.

COMMISSIONER COTE: Your description here’s fairly,

fairly high level. Can you provide more detail on

that, kind of how the program worked?

MR. WOLINETZ: A: Sure. So they benchmarked their


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wholesale costs against three spot markets. So a spot

market is where you’ve got very large volumes of fuel

being traded. So it’s kind of bigger than wholesale,

but still it’s within the realm of wholesale. So they

benchmarked them against New York Harbour, the Gulf

Coast, so this is the large concentration of refining

belts on the Gulf of Mexico and Los Angeles.

Proceeding Time 1:18 p.m. T14

Added to that they had costs for

distributions within Hawaii because it’s an

archipelago islands. Obviously wholesale costs within

those islands will differ. If you’re far away from

where the main import terminals or the refineries are,

you can have larger transportation costs. They were

trying to account for that. And just to be clear, it

was only a price cap on wholesale prices. So once you

got from the wholesaler to the retailer, the retailer

was free to set their prices in a competitive market.

In terms of how this affected prices,

because they had benchmarked their price to these spot

markets that actually didn’t have a lot to do with

their specific market -- so Hawaii does get fuel from

the West Coast. It can get fuel from the Gulf Coast,

but they are also supplied by elsewhere in the Pacific

Rim. So Singapore, for example. So they chose their

benchmarks that were not fully representative of what


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wholesale costs would be in Hawaii.

The demise of the regulation is reported to

be related to incidents in both Los Angeles and the

Gulf Coast. So one you had a hurricane in the Gulf

Coast that caused significant refinery outages and

then there was some sort of an accident in Los Angeles

that caused a refinery outage, too. Consequently the

prices in those markets went up in a way that probably

wouldn’t have significantly affected Hawaii. So under

the Gas Cap Law, the prices in Hawaii also went up,

the cap went up.

And as is often found with caps, they

become more of a target than a cap. It’s -- the

literature indicates capping prices is a difficult

thing to do. That it often ends up as a ceiling and

prices are generally riding at or just below the

ceiling. And so because the cap went up, then prices,

wholesale prices went up as well. That resulted in a

backlash, which ultimately ended with the removal of

that price cap.

COMMISSIONER COTE: The benchmarks they chose, would

they be described -- I mean I know this, but could

they be described as the marginal cost providers?

MR. WOLINETZ: A: Could they be described as the

marginal cost supply --

COMMISSIONER COTE: When they set it up originally,


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yes.

MR. WOLINETZ: A: When they set it up originally? No,

that wasn’t part of their decision as far as I could

tell. It didn’t look to me like they’re thinking

about what the marginal supply to the Island was.

COMMISSIONER COTE: Okay. Thank you.

COMMISSIONER DOEHLER: I know we’re talking about the

gathering of data and things like that, but then the

data is no good unless someone does something with it.

And so there’s another cost there as well. And so I

guess it depends what data we gather as to who has to

do -- just to receive it means nothing.

MR. WOLINETZ: A: Yeah, the data in and of itself does

not tell you. You need to turn it into information

and that requires labour.

COMMISSIONER DOEHLER: Some sort of analysis, so. So

the issue then is not so much looking at a regime of

reporting data, but also to look at what we have to

get. And I think it’s been explored already what data

we’re really looking at. So, I’m all over the place.

I want to carry on with some of the data,

your information’s been filed by Parkland and I want

to look at California for instance on the monthly

report. And I know it was pointed out how this

financial data, just sales data was gathered as

confidential. Did you see anything in the California


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webpage that would indicate if anything being reported

of this data being analyzed in some way being reported

on the California website?

MR. WOLINETZ: A: Sorry, could you repeat that? Just

where you said did I see on the website if there --

COMMISSIONER DOEHLER: Anything that was reported on

this data they’re gathering, are they reporting --

MR. WOLINETZ: A: I saw very little. There was

actually less of it available than for example in

Hawaii. That being said, California is apparently in

the process of their own inquiry. So something that

the California Energy Commission has seen has prompted

that or it could just be the Governor asking them to

do so based on Federal pressure. I’m not sure, but

there’s very little that I saw published from

California Energy Commission providing an analysis of

this.

COMMISSIONER DOEHLER: The reason I was asking is that

yesterday one of the presentations, I think it was on

the sales of various types of gasoline in California,

so.



THE CHAIRPERSON: Perhaps I can actually help. That

was Eliesen’s presentation and I don’t think that’s

been filed yet, but I just went on the California


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Energy Regulators website. And I don’t know if this

was the exact same slide that was in the presentation

yesterday, but it’s a slide that shows gasoline market

share in California and it’s got the number of gallons

of gasoline that are sold by presumably all the

participants. There’s Chevron, and Valero and

Phillips 66. And it’s got the number of gallons of

gasoline they -- presumably they sold and the percent

of market share. That’s, I believe, the slide we were

looking at yesterday.

MR. WOLINETZ: A: Okay, so I didn’t see that, but that

is presumably based on that information then.

COMMISSIONER DOEHLER: Just wondering how confidential

the information is then when they file it.

There’s one other question I would like to

follow up on, and this is just an observation I’ve

made and I want you to help me analyze it.


COMMISSIONER DOEHLER: On C5-16, which is the State of

Washington report that was done in 2007, and on page 3

and right at the top they talk about "Volatility in

refining differentials continues", and talks goes from

a high of $1.32 in April to a low of 16 cents in

December. Now that, I guess, is pretty close to the

refining margin that we’re talking about, because they

talk about the difference between the price of crude


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and the wholesale price of gas. So it sounds like the

same definition.


COMMISSIONER DOEHLER: And if I then do a conversion of

4 litres to a U.S. gallon and then try and do a

calculation of inflation and what the change in

exchange rate, so I get a range of between 33 cents

and 4 cents a litre in U.S. dollars in 2007 dollars.

If I double that to take care of exchange and

everything else, I get a number 66 cents, between 8

cents and 66 cents as refining margin.

MR. WOLINETZ: A: Doubling seems a bit far to me, but I

take your point.

COMMISSIONER DOEHLER: I’m just trying to pick a

number.

MR. WOLINETZ: A: It’s higher than the exchange rate,

yeah.

COMMISSIONER DOEHLER: So it’s probably less than that.


COMMISSIONER DOEHLER: Okay. I then look at the

Deetken report on page 46 and it compares the

Vancouver gasoline wholesale to tanker truck delivered

wholesale from Seattle and Edmonton and the difference

varies around 60 cents and maybe a little higher now,

80 or 90 cents.

So I’m seeing that the refinery margin


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inflated is between 8 cents and 66 cents, but this is

a difference of the refinery, of the margin, of the

wholesale margin is what I’m reading.

So it’s sounds like they’re making the

profit twice? I don’t know if I’m reading -- I know

you don’t have the data in front of me, but --

MR. WOLINETZ: A: So what did the Deetken report say

again?

COMMISSIONER DOEHLER: It said on chart 4.3.12, “The

Vancouver gasoline wholesale compared to tanker truck

delivered wholesale from Seattle and Edmonton.” So

presumably it’s the difference. And so the difference

on this chart starts around 60 cents and goes up and

down all over the place and ends around the, I don’t

know, the 90 cent mark.


COMMISSIONER DOEHLER: So that says -- well, even if

that was the total, it’s the difference and I got 8

cents to 66 cents to what was back in 2007.

MR. WOLINETZ: A: What was it back in 2007 --

COMMISSIONER DOEHLER: Well, and then inflated up and

everything else. So I’m trying to see if I’m

comparing the right, same numbers here. I know this

is all new to you. I’m throwing this out. It’s a

relationship I just see -- I just found and I’m trying

to understand it.


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I guess, is my logic -- am I out of logic

here first of all by saying the volatility of refining

differentials by doing that calculation? I’m starting

at that point and then if I’m comparing the right

thing, is the logic making sense?

MR. WOLINETZ: A: I’m afraid I’m not totally following

you. Tanker truck to --

THE CHAIRPERSON: Can you just tell everyone --

COMMISSIONER DOEHLER: Sorry, page 46 of the Deetken

report.

THE CHAIRPERSON: Which one?

COMMISSIONER DOEHLER: Phase 2.

THE CHAIRPERSON: Phase 2.

MR. BUSSOLI: And that would be Exhibit A2-1-1?

COMMISSIONER DOEHLER: A2-1-1. Sorry, yeah. I’m

trying to be transparent up here.

MR. WOLINETZ: A: Yeah. So what I’m seeing when I look

at this is if you think of -- so that this data

doesn’t go back to 2007, but what I’m seeing here is

that the wholesale costs in say the Seattle market

plus tanker truck transport to Vancouver is less than

the apparent wholesale cost in Vancouver indicating

that -- well, what that tells me is that gasoline by

tanker truck from Seattle is, if this were a

functioning market where the price is set by the

marginal cost, that it’s not the marginal cost.


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That’s what it’s telling me. There could still be a

marginal cost.


COMMISSIONER DOEHLER: And some other costs.

MR. WOLINETZ: Some other supply that is more

expensive. Another hypothesis, and I don’t want

people to take this the wrong way --

COMMISSIONER DOEHLER: I’m asking an expert to help me.

MR. WOLINETZ: Yeah, I mean there’s another hypothesis

that I not going to rule out either is that the market

is not as competitive as an idealized market where the

marginal cost is setting the price. So that’s two

hypotheses. One is that we haven’t correctly

identified the marginal cost in this figure or B) that

the marginal cost isn’t setting the price.

COMMISSIONER DOEHLER: Thank you. I’d like my chart

back.

THE CHAIRPERSON: Do you have anything further? Okay.

Thank you very much. We appreciate your attendance

here today and helping us understand these issues.

Thank you.

(WITNESS ASIDE)

THE CHAIRPERSON: So that leads us to the last item on

the agenda, which are submissions on final remark --

closing remarks, which would include anything that you

would like to -- that you feel you would like to sum


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up with, provide in summary of the last couple of

days, last few days. In particular whether you have

any additional information that you’d like to file on

the record and some estimate of what it is and how

long it would take.

Mr. Bussoli?

MR. BUSSOLI: Mr. Chair, I only rise simply because the

National Energy Board had mentioned -- or had asked

yesterday due to time constraints that they do their

closing this morning. So perhaps I’d suggest that

they go first in advance of the other parties.

THE CHAIRPERSON: That would be fine.

MR. BUSSOLI: I note that they’re third on the list.

THE CHAIRPERSON: We can accommodate that unless

there’s an objection from anyone that we go out of

order.

MR. BUSSOLI: And there’s a video link that’s required.

THE CHAIRPERSON: Well, I was planning to take a break

before we begin. So unless there’s an objection to a

change in the order. I’m not hearing any, then we

will take a break and we will come back and the NEB

will go first. So we’ll come back at 10 after 11:00.

(PROCEEDINGS ADJOURNED AT 10:59 A.M.)

(PROCEEDINGS RESUMED AT 11:20 A.M.) T17/18

THE CHAIRPERSON: Please be seated. Thank you.

Mr. Charlebois, how are you?


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MR. CHARLEBOIS: I’m good. Thank you very much, Mr.

Chair.

THE CHAIRPERSON: Very good. Thank you for joining us

again. I understand you have some closing remarks for

us.

MR. CHARLEBOIS: I do.

THE CHAIRPERSON: Please go ahead.

CLOSING STATEMENT BY MR. CHARLEBOIS:

MR. CHARLEBOIS: Thank you. So good morning, Mr. Chair

and Panel members. Again, I am Jean-Denis Charlebois,

chief economist at the National Energy Board. Thank

you for the opportunity to provide this closing

statement and for accommodating my participation by

videoconference. My closing statement will cover two

topics.

A quick one to start. I’d like to provide

some additional context on our response that I

provided to your panel on Wednesday. A statement I

made subject to check.

On Wednesday I mentioned that when a

shipper transfers its allocated capacity to another

shipper, the new shipper may ship a different product

than what was originally allocated depending on the

ability of Trans Mountain to accommodate that change.

I can confirm this is accurate. Trans Mountain allows

these changes on a case-by-case basis under the


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condition that the change does not affect the

nomination of other shippers on the system.


MR. CHARLEBOIS: So that was the first point. The

second point, which is somewhat more substantive

relates to the capacity and throughput on the Trans

Mountain Pipeline. So first let’s take a step back

and recognize that the context that we’re in, only a

pipeline operator, only Trans Mountain has firsthand

knowledge of the capacity of its system and how much

flows in its system. All of us, including the

regulator, relies on information supplied by the

pipeline. And we can also rely on other types of

observations to gain an understanding of its

throughput and the capacity of the system.

So first let me go through the nature of

the data that is submitted to the NEB by Trans

Mountain, as well as other observations that we can

make to assess the validity of that data.

So the NEB collects, verifies and publishes

throughput and capacity data on regular pipelines it

regulates. This data is filed by a regulated

companies pursuant to the NEB’s total information

regulations. Detailed requirements for the

information to be filed are provided in the IPD of the

NEB’s filing manual.


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So the Trans Mountain Pipeline profile on

our website presents this throughput and capacity

information. The Panel and the Commission can look at

the data in all its granularity by product deliver

points, et cetera. It’s also available on the

Government of Canada’s open data portal.

I am confident in the quality of the

pipeline data the NEB provides Canadians. This is

because such data is provided pursuant to regulations.

It is a regulatory requirement to report in a timely

and an accurate manner. It is also because our team

of market analysts scrutinize this data and can follow

up with companies if anomalies are detected.

So regarding the Trans Mountain data

specifically. the capacity of the pipeline has

obviously been a point of discussion in the inquiry.

So our data indicates that the capacity of the

pipeline was 317,000 barrels per day the first quarter

of 2019 and roughly 98 percent of that capacity was

utilized in that period.

THE CHAIRPERSON: Sorry, excuse me. Was that 317 or

370, 3-1-7 or 3-7-0?

MR. CHARLEBOIS: 3-1-7 in the first quarter.


COMMISSIONER COTE: And that varied by day, obviously?

MR. CHARLEBOIS: There is on a monthly basis depending


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on the nominations and other maintenance activities

that occur on the pipeline. But on average during the

first quarter of 2019 the capacity available was 3-1-7

thousand barrels per day.


MR. CHARLEBOIS: So over and above what I just

discussed in terms of where the data comes from and

pursuant to which regulatory requirements, there are

three observations that we can make to support the

finding that the pipeline is fully utilized. Let me

walk you through those three observations.

The first one is that the pipeline was

under apportionment during the first quarter of 2019,

much like it has been for the past several years.

Apportionment occurs when nominations exceed available

capacity.


Second, the fact that a secondary market

for capacity on the pipeline exists at a price much

higher than the regulated toll suggests that the

pipeline is fully utilized again. A market where

shippers choose to buy and sell allotted capacity at a

price that are well above the regulated toll would be

non-existent if capacity was available on the

pipeline.

Third -- and let me just take a sip of


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water here because this is a point we have not

discussed before. Third, on June 27, 2019, so about a

month ago, the NEB approved an application from Trans

Mountain for a system optimization surcharge. The

surcharge is for Trans Mountain to upgrade seven

pumping stations at a cost of $35 million. The goal

of doing this is to increase the capacity by up to 2.5

percent of the pipeline. This application was

scrutinized by shippers. It was assessed by the Board

and it was also supported by Suncor, Parkland and the

Canadian Association of Petroleum Producers, CAPP,

among others. So, let’s remind ourselves that

shippers are sophisticated parties. They have

demonstrated that on numerous occasions.

So if there was any evidence or any doubt

that excess capacity was available on the pipeline,

potentially in the range of 50 to 60,000 barrels per

day, I cannot conceive of a scenario where such

sophisticated parties would accept to have their

nominations apportioned or willingly pay higher tolls

in the secondary market or agree to an optimization

surcharge. I believe the matter would be brought

before the Board in no time.

So, and it is for those reasons and those

observations that I believe the data reported by Trans

Mountain today is accurate.


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Final point, where does the 400,000 barrels

per day of capacity comes from, or the 395,000 barrels

per day come from that was discussed yesterday? So

this figure can be found in various Trans Mountain

incentive toll settlements. Settlements are documents

that are agreed upon by shippers and the pipeline to

calculate tolls. The figure of 395,000 barrels per

day is one input to calculate the operational capacity

incentive adjustment. So the operational capacity

incentive adjustment is an incentive mechanism that

has been negotiated between the pipeline and shippers

to incent Trans Mountain to maximize the capacity it

offers to shippers.

Just to give you a sense of what’s going on

here, that one input is one of eight components into a

hydraulic formula to calculate what is the target

system capacity. So that figure of 395 doesn’t

consider factors such as hydraulic limitations of

Canadian facilities, planned or unplanned maintenance,

scheduled changes, power disruptions, or batching

requirements. Neither does it consider the potential

to ship heavy crude that would obviously impact the

capacity on the system.

To give you an example, for 2018 the target

system capacity as part of this incentive adjustment

was 286,000 barrels per day. And that is solely for


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the purpose of calculating the incentive adjustment

pursuant to the toll settlement.

So with that Mr. Chair and panel members, I

again welcome the opportunity to provide the closing

statement I just did. And happy to answer any

questions that you may have.


THE CHAIRPERSON: Thank you, Mr. Charlebois, that was

very helpful. I do have a question, and it's not

about specific numbers, but it's more about how -- it

may be how part of your toll works. And that is that

yesterday we heard that the capacity of the pipeline

varies according to the product mix. And specifically

we heard that -- and again, I don't want to go with

numbers here because I don't have all the numbers in

front of me. But generally what we heard is the

higher the percentage of heavy crude then the lower

the overall capacity is. Would you agree with that,

that statement that was made?

MR. CHARLEBOIS: Yeah, that's correct.

THE CHAIRPERSON: Right. So given that then on any

given day or week or month the product mix could

change, the capacity could also change, is that

correct, depending on the product that's --

MR. CHARLEBOIS: Yes, that's correct. Yeah, that's

correct.


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THE CHAIRPERSON: So how do the allocations work then?

Because, you know, on one day there's less capacity to

allocate because there's a given -- well, there's a

certain capacity to allocate because there's a

particular percentage of crude. But maybe tomorrow

there's going to be more crude so there's going to be

less capacity. So who gives up their capacity to

allow for the greater amount of crude? And I'm sorry

if I'm not wording this well, but hopefully you

understand the question.

MR. CHARLEBOIS: That determination and that analysis

is conducted on a monthly basis by the pipeline

operator. And that is mostly based on the nominations

that the pipeline receives, i.e. the quantity of

product that shippers want to ship per type. And once

the pipeline knows what are the demands for the

capacity, i.e. the quantities and the types and the

delivery points, then the pipeline is in a position to

establish the schedule for the month, as well as the

capacity that it can accommodate for that month.

So it doesn't so much effect on a daily

basis, but rather on a monthly basis depending on the

monthly nominations of shippers.

THE CHAIRPERSON: And that monthly schedule, capacity

schedule, depends then on the percentage of heavy

crude that's going to be shipped?


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MR. CHARLEBOIS: Yes, in large part, and it also

depends on the receipt and delivery points of those

nominations. It depends on the planned/unplanned

maintenance for that month, as well as other hydraulic

constraints that the pipeline is facing.

THE CHAIRPERSON: I understand, thank you.

COMMISSIONER DOEHLER: Then, a slight follow up.

Because I think it might be implied by what you're

saying but I'm not sure. Does light crude also reduce

the capacity? We keep hearing about heavy crude/.

Does light crude also have a similar type impact of

reducing capacity?

MR. CHARLEBOIS: It all depends from which baseline you

start. If you start from the nameplate capacity of

the pipeline of 300,000 barrels a day, which assumes

20 percent of heavy crude, then if you ship more light

then the capacity will increase because it is less

difficult to transport light than heavy. If you ship

less light, then presumably more heavy, then the

capacity will decrease from that baseline.

COMMISSIONER COTE: Put a slightly different way, if

the ratio -- based on the variance and the ration

between light crude and refined product, will capacity

change as a result of what that ratio is? Like a high

degree of one versus the other?

MR. CHARLEBOIS: Light oil is slightly heavier than


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RPPs. So directionally, if you ship more light than

assumed -- sorry, let me backtrack a little bit here.

Light oil is more heavy than RPPs. So if

you replace some light oil by RPPs, then the capacity

directionally will increase. By how much? I couldn't

tell you. But directionally if you replace light by

RPPs, then the capacity will increase and vice versa.

COMMISSIONER COTE: Thank you.

THE CHAIRPERSON: Thank you, Mr. Charlebois. Just one

final question from me. You mentioned a formula that

had eight inputs and that formula -- we like formulas.

So I'm wondering if we could find that somewhere or

you could provide that for us, please? You don't have

to do it now, but if you could submit it or let us

know?

MR. CHARLEBOIS: What I can do is I can follow up with

BCUC staff and send them the link to the Trans

Mountain negotiated settlement. Because that

settlement's actually available on the NEB website and

the schedule is the ITS number 15 and the formula is

there.

THE CHAIRPERSON: Okay, thank you, sir. Thank you, so

I think that that concludes our questions for today.

We're going to take a look at this capacity issue and

we may have some more follow-up questions, in which

case we will provide those in writing for you. But at


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this point what you've provided has been very helpful.

Thank you very much.

MR. CHARLEBOIS: Thank you.

THE CHAIRPERSON: Thanks, enjoy your day and enjoy your

weekend. Thanks.

Does Parkland have a closing statement?

Mr. Ahmed?

MR. AHMED: We do, but I thought we were last. But I'm

happy to go if that's --

THE CHAIRPERSON: Sorry, I've got you out of order. My

apologies. I've got -- I was looking at this

morning's order.

Ms. Allan and Mr. Eliesen, are you here? I

assume then there's no closing statement from them?


Advanced Biofuels I believe is not here

also.

MR. BUSSOLI: I just stand and say, Mr. Chair, that

Allan and Eliesen had indicated that they would send

written submissions yesterday.

THE CHAIRPERSON: Thank you. And 7-Eleven.

MR. WRIGHT: Mr. Chair, I have no real closing

submissions as such other than I would reiterate that

7-Eleven Canada has been pleased to participate in

this process and that we will be providing written

submissions by the August 8th deadline.


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In that regard it may be helpful, as has

been helpful throughout this process, for the

Commission to give directions as to topics or subjects

they would like to see addressed in the written

submissions. So as we digest the details that have

been exchanged up to this point, including the

testimony the last couple of days, we can focus in on

the issues that matter the most to you when we go to

write our submissions.

THE CHAIRPERSON: Absolutely, and we also thank 7-

Eleven for your participation. We appreciate it and

we will provide some direction on final submissions.

Thank you.

MR. WRIGHT: Thank you very much.

THE CHAIRPERSON: Super Save?

MR. CLARKE: Super Save doesn’t have a formal

conclusion per se or a statement, but on a procedural

note, following our in camera session today, we may in

fact make some of our comments and submissions public

at a later time.


MR. CLARKE: And we’ll coordinate with BCUC staff in

that regard.

THE CHAIRPERSON: Thank you. I appreciate that, Mr.

Clarke, and thank you for your participation.

Husky?


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MR. DINELEY: Mr. Chairman, Commissioners, Husky would

like to thank the Commission for the opportunity to

participate. It values the ability to provide

information to the public in this context, and in

general Husky is more than happy to provide

additional clarity to any issues that arose from its

information at a later date in writing. And Husky

reserves the right to make closing submissions by the

August 8th deadline and if the panel requires any

specific areas they would like Husky to address in

those submissions, they welcome that as well.

THE CHAIRPERSON: Thank you, Mr. Dineley, and thank you

for your participation. And on that note, if the

panel does have follow up questions, I appreciate your

offer to respond and I’d like to make the statement to

you and everyone that if we do have follow up

questions, we will reach out. However, we will

attempt to do that as soon as possible so that

information can get on the record before you have to

prepare your closing argument and we will provide

direction on your closing argument.

MR. DINELY: Thank you. That would be most helpful.

THE CHAIRPERSON: Thank you. Suncor?

MS. OLENIUK: Thank you, Chair. On behalf of Suncor I

just want to thank the Commission for the opportunity

to participate in the inquiry and in particular in


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this Oral Workshop. And we hope the evidence that was

provided by Suncor was informative and will be helpful

to the Commission in preparing its final report and

advice to the Minister.

We have no further evidence that we wish to

file other than we will be preparing a response to an

undertaking that was given by the Suncor panel

yesterday. And of course, like my friend, Suncor will

be pleased to respond in writing to any other

questions that the Commission may have. And we intend

to file written submissions on the 8th to deal with

some of the substantive matters.

THE CHAIRPERSON: Thank you, Ms. Oleniuk, and thank you

to Suncor for your participation. We appreciate it.

MS. OLENIUK: Thank you.

THE CHAIRPERSON: Imperial Oil? Mr. Gelbman

MR. GELBMAN: Thank you, Commissioner. Imperial Oil

would like to thank the BCUC and the panel for

inviting it to participate in the hearing. My clients

are not here and they were not here yesterday and I

think there are some components of the evidence that

were -- that was given, that they would like to have a

look at and have an opportunity to address and intend

to do so -- or at least reserve the right to do so in

its written submissions.

THE CHAIRPERSON: Absolutely.


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MR. GELBMAN: By August 8th. We have some additional

filings to make and we’re working to bring those

together and have them available to the panel on a

confidential basis. And that would conclude any of

our remarks.

THE CHAIRPERSON: Thank you, Mr. Gelbman, and thank you

to Imperial Oil for your participation. We appreciate

it. Thank you.

Shell?

MR. KEEN: Mr. Chairman, Commissioners. By way of

housekeeping, Shell Canada is beavering away at the

200 pages that we have outstanding, but beyond that

I’d like to say on behalf of Shell Canada that it also

appreciates the opportunity to participate in this

inquiry and contribute. We have no new material to

file with you in advance of August 8th, but do look

forward to providing written submissions at that time.


THE CHAIRPERSON: Thank you, Mr. Keen. And our

appreciation to Shell for your participation, thank

you.

MR. KEEN: Thanks very much.

THE CHAIRPERSON: And Parkland.

MR. AHMED: Thank you, Mr. Chair. I also do not have a

formal submission, just a few comments on procedural

matters.


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THE CHAIRPERSON: Please.

MR. AHMED: As far as evidence and process go, Parkland

is preparing confidential responses to the remaining

Commission questions from the questionnaire. We

anticipate filing those next week. To use my friend

Mr. Keen's term, we've also been beavering away at the

undertakings and we hope to provide those along a

similar timeline. And I've also been in touch with my

friend Mr. Bussoli about making Mr. White and Mr.

Krogmeier available to answers questions in an in

camera session. We've got a time set for that as

well, so that's been put in place. We do plan on

filing a submission in accordance with the regulatory

timetable on August 8th.

And my final comment is also to thank the

British Columbia Utilities Commission on behalf of

Parkland for the opportunity to participate in this

iniquity.

THE CHAIRPERSON: Thank you to Parkland also, Mr.

Ahmed. We appreciate your participation. Thank you.

Mr. Bussoli, are there any other matters

that we need to look at?

MR. BUSSOLI: None that I'm aware of, Mr. Chair.

THE CHAIRPERSON: Okay. My colleague just pointed out

that we should look at a deadline for undertakings.

Is it possible for those with remaining undertakings


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to get them to us by, say, mid next week? Is that

unreasonable for anyone? I just picked a date.

MR. AHMED: I'm concerned about over promising and

under delivering. I expect --

THE CHAIRPERSON: The end of next week?

MR. AHMED: The end of next week will be reasonable.

THE CHAIRPERSON: Okay.

MR. AHMED: Our hope is to certainly get them in

advance of the in camera session.

THE CHAIRPERSON: Sure. Well, as soon as possible is

appreciated, but if we could aim for at latest the end

of the week, please. Mr. Keen, is that okay?

MR. KEEN: Both mid next week and to the end of next

week are acceptable to us. Thank you.

THE CHAIRPERSON: Thank you. All right. Okay.

Well, again thanks to everyone and wish you

all a safe journey home and enjoy your weekend. And

we are adjourned.

(PROCEEDINGS ADJOURNED AT 11:44 A.M.)

July 22nd, 2019

Documents

BRITISH COLUMBIA UTILITIES COMMISSION€¦ · MR. AHMED: I believe the next exhibit would be C5-10. THE CHAIRPERSON: Thank you. (BRITISH COLUMBIA GOVERNMENT STATEMENT: MINISTER'S