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ONTARIOENERGYBOARD
FILE NO.: EB-2007-0707
VOLUME:
DATE:
BEFORE:
6
September 16, 2008
Pamela Nowina
Ken Quesnelle
David Balsillie
Presiding Member
Member
Member
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EB-2007-0707
THE ONTARIO ENERGY BOARD
IN THE MATTER OF Sections 25.30 and 25.31 of the Electricity Act, 1998;
AND IN THE MATTER OF an Application by the Ontario Power Authority for review and approval of the Integrated Power System Plan and proposed procurement processes.
Hearing held at 2300 Yonge Street,25th Floor, Toronto, Ontario,
on Tuesday, September 16, 2008,commencing at 9:02 a.m.
------------------VOLUME 6
------------------
B E F O R E:
PAMELA NOWINA PRESIDING MEMBER
KEN QUESNELLE MEMBER
DAVID BALSILLIE MEMBER
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A P P E A R A N C E S
JENNIFER LEA Board CounselDAVID CROCKER
DAVID RICHMOND Board StaffVIOLET BINETTENEIL McKAY
GEORGE VEGH Ontario Power Authority (OPA)MICHAEL LYLEGLEN ZACHERJAMES HARBELLKRISTYN ANNIS
STEVEN SHRYBMAN Council of Canadians
JAY SHEPHERD School Energy Coalition (SEC)JOHN DeVELLIS
DAVID POCH Green Energy Coalition, PembinaKAI MILLYARD Foundation and Ontario Sustainable
Energy Association (OSEA)
ANDREW LOKAN Power Workers' Union (PWU)JUDY KWIKRICHARD STEPHENSON
BASIL ALEXANDER Pollution ProbeMURRAY KLIPPENSTEINCORY WANLESSKENT ELSON
TOM BRETT Association of Power Producers ofCARLTON MATHIAS Ontario (APPrO)
PETER THOMPSON Canadian Manufacturers & ExportersVINCE DeROSE (CME)NADIA EFFENDI
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A P P E A R A N C E S
MARK RODGER Alliance of Energy Consumers (Association of Major Power Consumers of Ontario, AMPCO; Canadian Chemical Producers' Association; Cement Association of Canada (Ontario); Industrial Gas Users Association, IGUA; Ontario Federation of Agriculture, OFA; Ontario Forest Industry Association; Ontario Mining Association; Stone, Sand and Gravel Association of Ontario
IAN MONDROW City of TorontoELISABETH DeMARCO
MICHAEL BUONAGURO Vulnerable Energy Consumers' Coalition (VECC)
JOHN CYR City of Thunder Bay, NorthwesternNICK MELCHIORRE Ontario Municipal Association
(NOMA), Town of Atikokan
ROBERT WARREN Consumers Council of Canada
KELLY FRIEDMAN Electricity DistributorsRAUL AGARWAL Association
JOHN RATTRAY Independent Electricity SystemPAULA LUKAN Operator (IESO)
TIM MURPHY Canadian Solar IndustriesAMANDA KLEIN Association (CanSIA)
CHARLES KEIZER Brookfield Energy Marketing Inc., Great Lakes Power Ltd. (GLPL)
DOUG CUNNINGHAM Nishnawbe Aski Nation
ALEX MONEM Saugeen Ojibway Nations (SON)ARTHUR PAPE
PETER FAYE Lake Ontario WaterkeeperJOANNA BULL
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A P P E A R A N C E S
JENNIFER AGNOLIN NorthwatchVIVIENNE BALL
JEFF ROSEKAT First Nations Energy AllianceCHERIE BRANTGENEVIEVE LE COMTE
JIM HAYES Society of Energy ProfessionalsJO-ANNE PICKEL
SARAH DOVER Provincial Council of Women of Ontario (PCWO)
MICHAEL ENGELBERG Hydro One Networks Inc. (HONI)BLAIR McDONALD
DAVID GOURLAY Newfoundland and Labrador Hydro
DAVID STEVENS Enbridge Gas DistributionDENNIS O'LEARY
PAUL MANNING National Chiefs Office, Assembly of First Nations
FRED CASS Ontario Power Generation (OPG)
ANDREW TAYLOR Ontario Waterpower Association, Canadian Wind Energy Association
DAVID MacINTOSH Energy Probe
ALSO PRESENT:
Dr. JAN CARR Ontario Power AuthorityMIRIAM HEINZ
TOM ADAMS Alliance of Energy Consumers
CHRIS BUCKLER Electricity Distributors' Association
GRACIA JANES Provincial Council of Women of Ontario
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I N D E X O F P R O C E E D I N G S
Description Page No.
--- On commencing at 9:02 a.m. 1
ONTARIO POWER AUTHORITY - PANEL 2, RESUMED 1A. Shalaby, A. Pietrewicz, Previously Sworn
Cross-Examination by Mr. Cunningham 1Cross-Examination by Mr. Rosekat 32Cross-Examination by Mr. Gourlay 39
--- Recess taken at 10:16 a.m. 50--- Upon resuming at 10:38 a.m. 50
Cross-Examination by Ms. Dover 50Cross-Examination by Mr. Murphy 86Cross-Examination by Mr. Cowan 108Questions from the Board 116Re-examination by Mr. Vegh 125
--- Luncheon recess taken at 12:55 p.m. 131--- Upon resuming at 2:33 p.m. 131
Procedural Matters 131
ONTARIO POWER AUTHORITY – PANEL 3 – REFERENCE FORECAST AND RESERVE REQUIREMENTS 133M. Adelaar, C. Bataille, V. Stein, Affirmed;L. Buja-Bijunas, K. Frecker, B. Gibbons, A. Pietrewicz, Previously Sworn.
Examination by Mr. Vegh 133Cross-examination by Mr. Shepherd 147
--- Whereupon hearing adjourned at 4:16 p.m. 193
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E X H I B I T S
Description _______Page No.
Exhibit No. K6.1: Document ENtitled, "Comparison of 20-Year Percentage Increases In Reference Forecast" 181
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U N D E R T A K I N G S
Description Page No.
UNDERTAKING NO. J6.1: TO PROVIDE THE ASSUMPTIONS UTILIZED BY THE OPA TO MEET THE NEW BUILD IN-SERVICE DATE OF 2018 71
UNDERTAKING NO. J6.2: TO PROVIDE A BRIEF EXPLANATION AS TO THE CHANGES IN THE ELECTRICITY USE THAT ARE DRIVING CHANGES IN THE GROWTH OF PEAK VERSUS ELECTRICITY 189
NO
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Tuesday, September 16, 2008
--- On commencing at 9:02 a.m.
MS. NOWINA: Please be seated.
Good morning, everyone. Today is day 6 of the oral
portion of the review of the Integrated Power System Plan.
The Ontario Power Authority is seeking the Board's approval
of the integrated power system plan and certain procurement
processes. The Board has assigned file number EB-2007-0707
to this application.
Today we continue with the cross-examination of panel 2
on plan overview and development. Before we begin cross-
examination, are there any preliminary matters?
None? For the Nishnawbe Aski Nation, Mr. Cunningham.
ONTARIO POWER AUTHORITY - PANEL 2, RESUMED
Amir Shalaby, Previously Sworn
Andrew Pietrewicz, Previously Sworn
CROSS-EXAMINATION BY MR. CUNNINGHAM:
MR. CUNNINGHAM: Yes, good morning, Madam Chair and
Board Members and OPA witnesses.
I just want to give a little bit of background
information about NAN, in case people don't know what NAN
is. NAN is the First Nations organization which represents
49 First Nations communities in northwestern and
northeastern Ontario and in what's called the far north,
communities north of the 50th parallel.
MS. NOWINA: I am going to stop and do a sound check,
Mr. Cunningham. Can everyone hear Mr. Cunningham at the
back? Is that a yes? Thank you.
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MR. CUNNINGHAM: Is that why they're leaving?
MS. NOWINA: They're still here, Mr. Cunningham. Go
ahead.
MR. CUNNINGHAM: The territory occupied by NAN
communities is 210,000 square miles, so it's a huge area.
It is actually two-thirds of the size -- two-thirds of the
province of Ontario.
Now, with respect to the IPSP, I have a number of
general questions about the planning process and planning
criteria for the OPA witnesses.
Mr. Shalaby, my first question is: Would you agree
that the IPSP is not a detailed 20-year action plan? It's
not the kind of plan that you are presenting saying, Damn
the torpedoes, this is where we're going to go in 20 years?
MR. SHALABY: There are no torpedoes in our story, no.
MR. CUNNINGHAM: Would you agree that the fact that you
are going to be reviewing this every three years indicates
that most of the data to be generated to determine the
prudence of an option has really yet to be generated,
because it's future oriented?
MR. SHALABY: That is a fair assessment, yes.
MR. CUNNINGHAM: So you have indicated the projects or
the procurements that you are actually asking approval for
this time around, and they're rather limited; correct?
There are a few gas facilities?
MR. SHALABY: Yes.
MR. CUNNINGHAM: I believe there are transmission
facilities, as well?
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MR. SHALABY: There is development work on transmission
options, yes.
MR. CUNNINGHAM: Okay. But apart from that, the bulk
of the plan really is going to be subject matter of future
appearances before this Board; is that correct?
MR. SHALABY: More of the plan will be incrementally
requested approval for as we proceed, yes.
MR. CUNNINGHAM: So in a sense, maybe what we're
looking at is approval for the tip of the iceberg at this
point?
MR. SHALABY: I -- not necessarily. I mean, the
requirements for Ontario are -- as we showed, is a large
level of commitment to the requirements over the next 20
years and we're requesting another increment today. And
there will be a bit more over the next several years.
So I don't think it is many more to go over the years.
So iceberg is probably not a very good analogy, no.
MR. CUNNINGHAM: With respect to the plan, though, in
addition to certain procurements that you are requesting
approval for, you are also more generally, I guess, asking
this Board to approve the planning criteria that you have
applied; is that correct?
MR. SHALABY: Yes.
MR. CUNNINGHAM: Okay. And --
MR. SHALABY: We came through that. I am going to
agree to what we agreed to before, the methodologies, the
logic, the compliance with Regulation 424 that asks us to
consider a number of things. So the precise nature of the
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approval is: Have we complied with Regulation 424,
including the large number of conditions laid out in that
particular regulation?
MR. CUNNINGHAM: Right. So you have the directives.
You have any application legislation, you have Regulation
424, and you have the criteria that you have identified that
come out of this general concept of sustainability; correct?
MR. SHALABY: That's correct.
MR. CUNNINGHAM: So if we can take a look at slide 8?
MS. NOWINA: Slide 8, which is Exhibit K.1?
MR. CUNNINGHAM: I think it is K1.1, yes.
Now, these are the six criteria, and I just want to
confirm, based on what I have heard thus far, that you are
saying that when you applied these criteria for the plan,
for the purpose of the plan, you didn't ascribe any
particular weight to the criteria; correct? Like, one
wasn't worth 30 percent, one wasn't worth 10 percent, et
cetera. Is that correct?
MR. SHALABY: Correct.
MR. CUNNINGHAM: Okay. And would you agree that
criteria or concepts, they're neither true for false? It is
not an issue of whether a concept is true or false. It is
really whether or not they're more or less useful to get you
where you want to go; is that correct?
MR. SHALABY: That's a reasonable description, yes, in
terms of costs that could be higher or lower. It's not true
or not, but it is more numerical and more quantitative in
the information it provides.
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MR. CUNNINGHAM: So in using these criteria for the
planning process, is it safe to say that the OPA felt that
these six criteria were the most helpful criteria in helping
you identify options for the future or to reach a particular
outcome?
MR. SHALABY: Yes.
MR. CUNNINGHAM: Okay. And with respect to the six
criteria, even though you didn't weight them for the
purposes of the plan, was there an attempt to apply these
six criteria in the same manner when looking at different
resource types?
So, in other words, when you were looking at applying
these for nuclear generating sources, did you apply them in
the same way to assess nuclear generating sources as you
applied them when you were looking at hydroelectric sources?
MR. SHALABY: We applied them in the same way, but
different resources exposed different vulnerabilities, and
there's reason, for example, to look at one or the other of
the criteria for one or the other of the resources.
So, for example, with nuclear...
MR. VEGH: I didn't realize it was one panel.
MR. SHALABY: So, for example, the feasibility of new
technology, when we're considering a new technology,
technology that is not in common use in Ontario, we focus
more on feasibility to start with.
If it passes the feasibility and -- we focus on
reliability, and then when it passes that, we look at
flexibility.
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Looking at hydroelectric resources, feasibility was a
large consideration in knowing what sites might be feasible
to deliver and to develop as an example.
So different resources raise different questions and
different resources command a different amount of
consideration at the different criteria, for example, but
there was no intent in weighing one more than the other.
MR. CUNNINGHAM: Okay. But in terms of their
application, are you using these criteria in a deterministic
way - that is, to help you reach a particular decision or
guide you to a decision - or are you using the criteria
after the fact, after you have made a decision, to justify
the decision you have made?
MR. SHALABY: We have done three things with these
criteria. One is to evaluate the options, the
appropriateness of using ingredients going into the plan, in
developing the plan itself, and then in describing its
characteristics and its performance.
So environmental performance is a criterion that is
descriptive. Cost is a criterion that is both used for
developing the plan and is descriptive.
So the criteria do three things: evaluate the options
going in, develop the plan itself, and then describe the
performance of the plan.
MR. CUNNINGHAM: Okay. I am not too sure whether you
have answered my question. Are you using these criteria to
guide your decisions to get to a particular outcome --
MR. SHALABY: Yes.
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MR. CUNNINGHAM: -- or are you starting out the outcome
and basically using them to justify your decisions?
MR. SHALABY: No. We're using them to guide us to an
outcome.
MR. CUNNINGHAM: In that case, wouldn't it have been
important for you to ensure that you apply the criteria in
an even-handed manner with respect to each of the resource
types?
MR. SHALABY: We did.
MR. CUNNINGHAM: Okay. Did the OPA ever prepare a
chart or a summary identifying along one side the six
criteria, the planning criteria, and then all of the
evidence that you garnered to deal with each of those
criteria for each of the resource options that you looked
at?
Is there some summary, a document that summarizes all
of that, so that you can show that option A was clearly
better than option B based on our six planning criteria?
MR. SHALABY: We did not prepare anything in the form
that you described.
MR. CUNNINGHAM: Why didn't the OPA do that? Because
that would summarize your entire project.
MR. SHALABY: I am not sure -- how would you find that
an option was clearly better than any other option? Options
are suitable for a specific role and a specific time.
There is no worse or better. There is a fit between
the options that creates a plan that works.
MR. CUNNINGHAM: Well, I am a bit confused, because
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you're saying there is no worse or better. Isn't the whole
exercise of planning to ensure that you choose the most
effective route to get to a particular destination?
MR. SHALABY: The most effective combination that
complies with government goals and with the criteria that we
developed.
MR. CUNNINGHAM: Right. But you didn't prepare a
summary, then, right, of all of the evidence you garnered
for each option you looked at?
MR. SHALABY: We described each option. We described
its features. We described how we used the criteria under
every evidence section in the D section, D-2-1, D-3-1,
D-4-1, D-5-1. All along, we show how the criteria were
applied to each, renewable resources and unrenewable
resources, conservation resources and so on.
Stay tuned, you will hear all of that in the next
weeks.
MR. CUNNINGHAM: Okay. With respect to the evidence
that the OPA has put forward, I would like to refer you to
slide number 6 because I am still a bit confused as to what
really is left in this plan to be scrutinized by the Board.
Slide number 6 you know talks about the prefiled
evidence, August 2007 and the updated evidence, August 2008.
Would you agree that in the span of one year we have seen
significant change, in terms of the factual reality that, on
which this plan sits?
MR. SHALABY: Yes.
MR. CUNNINGHAM: Okay. And so with respect to the plan
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now, in terms of what this Board is looking at, are we
looking simply at the planned portion of the updated
evidence?
MR. SHALABY: We're looking at it in the context of the
-- all of the resources, but, yes, those are the decisions
that are yet to be made and it's even a subset of that, not
all of that, but a subset of that that comes in the front
end of that.
MR. CUNNINGHAM: What do you mean a subset of that? Of
the planned portion, because that's the stuff you haven't
committed to at this point; correct?
MR. SHALABY: Yes. Only the things that need approval
at this time are we seeking approval for.
MR. CUNNINGHAM: Okay. So there are things within the
plan category that don't need OEB approval.
MR. SHALABY: At this time, yes.
MR. CUNNINGHAM: Okay, at this time. But over the
course of the plan, the 20 years, you expect that you will
need approval for everything in that category; correct?
MR. SHALABY: Yes.
MR. CUNNINGHAM: Okay. Of that category, when I add up
the megawatts that you are looking to deal with, in terms of
the total power supply that would have to be the subject of
approvals by the OEB over the next 20 years, are we looking
at about 16,000 megawatts there?
MR. SHALABY: That's a good enough estimate.
MR. CUNNINGHAM: Okay. And of that --
MR. SHALABY: We have the details, but I don't suspect
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you want the detail.
MR. CUNNINGHAM: I just wanted a ballpark figure.
We're looking at basically over the next 20 years you want
this Board to approve resources capable of producing 16,000
megawatts; is that correct?
MR. SHALABY: That he the planned resources at this
time, yes.
MR. CUNNINGHAM: Okay. Does that involve CDM as well?
Is CDM part of that?
MR. SHALABY: Yes.
MR. CUNNINGHAM: So in other words, you're really not
asking for approval of 16,000 megawatts worth of power to go
through the system, because if CDM approvals are asked for
-- what CDM really says is that part of that 16,000
megawatts isn't going to materialize. Correct?
MR. SHALABY: We do need approval for procurement of
conservation, that's correct.
MR. CUNNINGHAM: So those are the programs to convince
people to use energy; correct?
MR. SHALABY: To use it more efficiently, yes.
MR. CUNNINGHAM: But in terms of CDM, you are really
talking about two basic things. One is you're trying to
convince people not to use electricity, to cut down on their
use.
MR. SHALABY: I modified that, to use it more
effectively or more efficiently. And we have categories in
conservation.
MR. CUNNINGHAM: One of the things is like, Don't turn
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your lights on when you don't have to; correct?
MR. SHALABY: Conservation is much more sophisticated
and much more broad than the way you describe it here.
MR. CUNNINGHAM: But at its basic level, you are either
asking people not to use as much electricity in the future,
or you are asking them to shift the timing of their use;
correct? At its very basic feature.
MR. SHALABY: No. At a basic level, we are asking
people to use electricity more effectively, to shift from
one fuel to another, to shift the timing of the use of
electricity, and to generate electricity on their own
premises.
MR. CUNNINGHAM: How do I use electricity more
effectively? Really what you're saying is if I am using
more effectively, I am using less of it than I would
otherwise use, correct.
MR. SHALABY: But it's not use not using electricity.
It's keep the refrigerator going, keep the lights going, but
use less electricity.
MR. CUNNINGHAM: Okay. But ultimately what I am asking
you is of the 16,000 megawatts, because CDM is a component
in that, are you not really saying that we're not talking
about the actual use of 16,000 megawatts over the next 20
years, because if CDM is successful, we will only use maybe
12,000 megawatts?
MR. SHALABY: That much I can agree to. The supply-
side, the supply-side of this 16 is 12 out of 16, yes.
MR. CUNNINGHAM: Right. So we see the plan shrinking
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even more, then, in terms of the actual resources you are
asking for approval of, to generate electricity.
MR. SHALABY: Well, that's where I disagree. To
achieve the conservation, you require expenditures. That is
resources.
MR. CUNNINGHAM: Okay, but let me ask you this. CDM,
what electricity does CDM generate? It doesn't generate any
electricity; correct?
MR. SHALABY: It generates, one of the categories is
customer-based generation. That generates electricity.
MR. CUNNINGHAM: Okay.
MR. SHALABY: It generates -- it generates benefits for
the consumer.
MR. CUNNINGHAM: Okay. Sorry.
MR. SHALABY: It generates benefits for the consumer at
lower electricity use.
MR. CUNNINGHAM: Okay. But one of the benefits of CDM
is that it doesn't -- it causes people to use less
electricity than they otherwise would.
MR. SHALABY: Yes.
MR. CUNNINGHAM: Okay. So in terms of CDM being
presented as a resource, because I have seen a lot of
discussion in the materials about it being a resource, I am
trying to wrap my mind around this. It's not a tangible
thing; correct?
MR. SHALABY: I am not agreeing to that.
MR. CUNNINGHAM: Well, how is people not using the
electricity they otherwise would use or people shifting the
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timing of their electricity use to off-peak hours, how is
that an actual tangible resource?
MR. SHALABY: It is a more effective -- it's a more
efficient chiller, it's better refrigerators, is it more
effective lighting. It is controls. It is sensors. It is
all kinds of technologies that the next panel or two will
get into in more detail.
It is a very tangible and a very active resource to
reduce the demand for electricity.
MR. CUNNINGHAM: Okay. But in terms of asking this
Board to approve hardware to generate electricity or
hardware to transmit electricity, would you agree that, in
terms of the planned area on the slide number 6, we're
really talking somewhere maybe around 12,000 megawatts,
then, over 20 years?
MR. SHALABY: For the supply side, I agree with that,
yes.
MR. CUNNINGHAM: So if we consider, you know, the
mandate of this Board in terms of approving hardware to
actually generate or transmit electricity, we see the plan
shrinking even more; correct?
MR. SHALABY: If you want to scope it to that portion
of the integrated plan, I agree with that. But the Board
has a large role to play in the conservation side as well.
MR. CUNNINGHAM: Okay. The other question I have and
it kind of struck me when I was looking at the plan, when
you sort of stand back, why wasn't the planning process used
to identify the supply mix that Ontario should be pursuing
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during the next 20 years?
MR. VEGH: Madam Chair, this is getting into the issue
of how the Minister of Energy set the supply mix, and that's
clearly not an issue before this Board.
MR. CUNNINGHAM: Well, here's what -- I mean, Mr.
Shalaby is here to answer questions on the planning process
and I am asking whether, really a question that goes to the
prudence of the planning process that they chose.
MR. VEGH: No, I'm sorry. If I may, Madam Chair, sorry
to be speaking again.
MS. NOWINA: Go ahead, Mr. Vegh.
MR. VEGH: The legislation is clear that the minister
sets the supply mix and the OPA, then, tries to implement
that supply mix.
So we're not going to be reviewing the prudence of that
division of authority that the legislature has granted to
the minister and to the OPA. And the Board's decision on
issues day was very clear about the respective roles of the
minister, the OPA, and the OEB in that the minister sets the
supply mix, the OPA comes up with a plan to meet that mix,
and then the OEB reviews that plan by reference to its
mandate.
MS. NOWINA: Let me put a bit of a box around Mr.
Cunningham's questions, then. Mr. Shalaby himself, I think,
in this proceeding has talked about planning in two phases.
He has talked about the planning which went into the supply
mix advice that one assumes went into the directive. And
then he has talked about the planning for the IPSP.
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I think if Mr. Cunningham has questions about how one
of those inform the others or what type of planning went
into the second phase of planning, because the first phase
of planning had taken place, that those kinds of questions
are fair.
MR. CUNNINGHAM: Well, I guess maybe my question is
more general, then. The IPSP is not really a plan that
says: Here's where we should get to, in terms of resource
types during the next 20 years; correct? It doesn't say
that?
MR. SHALABY: These are the goals that are set by the
Minister. Exhibit B-3-1 talks about three stages: One is
setting the goals, developing the goals of the IPSP and that
is ministerial responsibility; developing the IPSP, that's
an OPA responsibility; reviewing the plan, and that's an OEB
responsibility; and we talked about the implementation by a
large number of developers and proponents and companies
post-approval.
MR. CUNNINGHAM: I guess my question would be, then,
and it's a general one, and I think you are competent to
answer it: Do you think it was a prudent decision to keep
the -- to identify the supply mix first, and then just
restrict the planning process to determining the routes that
you could take to get there?
MS. NOWINA: Mr. Cunningham, I don't think that that
question is in scope.
MR. CUNNINGHAM: With respect to CDM, I have a number
of questions about that.
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Would you agree, at the very least, Mr. Shalaby, that
CDM is something different from the other supply mix
options, because it doesn't involve the development of
hardware or tangible objects to generate electricity or
transmit electricity?
MR. SHALABY: I agree it is different -- every option
we talked about has different characteristics, so I will
agree to the first part of your proposition, but not to the
second part. It is hardware, and it is technology, and it
is it behaviour, and it is rate structures, and it is smart
meters and smart customers. It is a lot of things.
MR. CUNNINGHAM: Okay. So in terms of hardware, what
hardware are we talking about? Smart meters we understand.
MR. SHALABY: We talked about more effective chillers.
We talked about more effective lighting, talked about
controls, talked about communication devices. And the
supply -- the panels that will follow can tell you a little
bit more about specific technologies, if you are interested.
MR. CUNNINGHAM: It is aimed, though -- when you said
to use electricity more effectively, what you're really
saying is to use it more efficiently so we get bigger bang
for our buck; right? We basically do the same processes
that we're doing now, but we use less electricity to do it?
MR. SHALABY: That's correct.
MR. CUNNINGHAM: Okay. Would you agree that some of
the agencies that have responsible for supplying power in
the province in the past have not been big proponents of
conservation and demand management and -- for example, the
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OPG? Would you agree that OPG has not been a real player,
historically, either in its form as OPG or Ontario Hydro in
the past, in trying to convince people to use less
electricity in the province?
MR. SHALABY: No, I don't agree with that.
MR. CUNNINGHAM: Well, wouldn't you agree there is an
inherent sort of, I would say, institutional dynamic for a
generator of power not to want to get smaller? They want to
get larger?
MR. SHALABY: I don't want to speculate on dynamics and
company motives, and so on. But at the time of Ontario
Hydro's integrated existence, the demand management and
efficiency was a very active part in the late '80s and early
'90s. It took a lower profile after that. It took higher
profile before that.
Throughout the phases of electricity development in
Ontario, there were different degrees of emphasis, some
within the integrated the utility, some with the
distributing utilities, some with outside companies.
So it is finding its way outside the utility world and
not just with the utilities at this time.
MR. CUNNINGHAM: Okay. With respect to CDM being a
resource, isn't it really a bunch of measures? When you get
down to its essence, it is a bunch of measures to convince
consumers in Ontario not to use a real resource - that is,
electricity - or at least to use it more effectively so we
don't use as much electricity as we would normally
anticipate?
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MR. SHALABY: We have been through that, yes.
MR. CUNNINGHAM: So it's a resource in a sense to
convince us not to use a resource?
MR. SHALABY: I don't want to split hairs again, but it
is to use it more effectively, is a better way of describing
it.
MR. CUNNINGHAM: Okay. One of the things that struck
me was CDM is the sort of first line of attack to deal with
anticipated demand in the future; isn't that correct?
MR. SHALABY: It is the priority, because it's a lower
cost. It's the shortest lead time. It is -- it's got a lot
of advantages that makes it the most preferred option, yes.
MR. CUNNINGHAM: So in terms of what you have to first
do, if you're talking about any kind of resource to develop
over the next 20 years, is you had to establish what you
thought was going to be the demand on the system over the
next 20 years; correct?
MR. SHALABY: That is one of the early steps.
MR. CUNNINGHAM: Wouldn't you agree that using CDM as
your first sort of plan of attack to deal with anticipated
demand, that that would actually give the OPA an incentive
to overstate the anticipated demand going forward?
MR. SHALABY: No.
MR. CUNNINGHAM: The reason why I am suggesting this is
that to the extent that you overstate the demand and you
say, Our first way of knocking this demand down is
conservation and demand management, and if the demand that
you've identified is likely going to occur in the future
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doesn't materialize, then you can say, Well, our first plan
of attack, CDM, has been wildly successful.
MR. SHALABY: I am disagreeing with that.
MR. CUNNINGHAM: Wouldn't you agree there is some truth
to that, that using CDM as your first plan of attack does
give you a margin of error, in terms of your demand
forecasts?
MR. SHALABY: It's the third time you asked the
question. The answer remains "no".
MR. CUNNINGHAM: Another question I have deals with the
way that the data has been presented in the materials from
the OPA --
MR. SHALABY: And the evaluation of programs will be
described by former -- subsequent panels. Conservation is
not just, Look at it, it's not here, it must have happened.
There is rigorous evaluation. There is rigorous tracking of
the spending and the impact of the conservation spending.
Those are the reasons I am disagreeing with you.
MR. CUNNINGHAM: Don't you agree if you have predicted
that, let's say, in five years we're going to be using
30,000 megawatts a day, right, on average, and five years
from now we have 25,000 megawatts of demand on the system,
actual demand, that by the fact -- the mere fact you have
put CDM as the first plan of attack allows the OPA to stand
back and say, It looks like we've been incredibly successful
in getting that demand down from 30,000 down to 25?
MR. SHALABY: Can I address the Panel just to
demonstrate that we haven't done that when demand is lower
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in 2007, 2006. We say demand is lower and it is for a
number of reasons: the economy, the restructuring of the
economy and conservation, all three reasons, and the
climate, weather.
There are many reasons to explain the change in demand,
and we have not demonstrated the behaviour that you are
talking about of claiming it is all conservation. We
haven't done that. So the record shows we haven't done
that.
MR. CUNNINGHAM: But the potential exists for that to
be done; correct?
MR. SHALABY: The potential exists for all kind of
possibilities, but the record shows that we haven't done
that.
MR. PIETREWICZ: Specifically, I think Mr. Shalaby is
referring to Exhibit B-1-1, pages 7 and 8, where we discuss
the recent levels of observed demand in Ontario, and on page
8, line 1 of B-1-1, we state that:
"At this point it is not possible to provide an
explanation for the difference with any level of
certainty."
And we go on to describe, as Mr. Shalaby has, that it
is likely a factor -- a combination of the economy,
potential of conservation. So this is the reference Mr.
Shalaby was making.
MR. CUNNINGHAM: Is the OPA saying, then, ultimately,
in the grand scheme of things, you're not going to be in a
position to determine the effectiveness of your CDM plans?
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MR. SHALABY: We will be.
MR. CUNNINGHAM: You will be?
MR. SHALABY: In time, we will evaluate all of the
programs and we will be able to determine the effectiveness
of programs, yes.
MR. CUNNINGHAM: How do you evaluate the effectiveness
of a CDM program? Because you are really saying, Here's our
predicted demand and it didn't materialize, so it has to be
because of something we did in terms of conservation demand
management. How do you evaluate that?
MR. SHALABY: Stay tuned. The panel on conservation
has a section on evaluation, techniques for evaluation.
It's a measure that the Board here insists on in approving
conservation expenditures. It has done that for gas
companies, electricity companies, for many years.
It is a well-established discipline, and it will
continue to develop and inform conservation programming and
evaluation in Ontario.
MR. CUNNINGHAM: But the other day you pointed out to
the Board, and to one of the lawyers who was cross-examining
you, that it is the hardest of all of the resource types to
prove that it's actually been effective; correct?
MR. SHALABY: I could be reminded. I could benefit
from a reminder of that.
MR. CUNNINGHAM: I don't have the section in front of
me. This is a slide that was put up in front of us about
how the causal connection between your CDM measures and
actually reducing demand, that was the hardest causal
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connection --
MR. SHALABY: I think if you give me the quote, I would
be better able to comment on what you are saying.
MS. NOWINA: Mr. Cunningham, before you continue, you
gave me an estimate of 45 estimate. You have less than 15
left and it seems like you have gone over the same territory
rather thoroughly. So if you have other areas you want to
move to, you don't have a lot of time remaining.
MR. CUNNINGHAM: I guess what I would like to do is to
move on to the issue of participation in the plan. I would
like to just confirm that in terms of the mandate of the
OPA, under section 5(1)(f) this is really the mandate, one
of the objects of IESO but it relates to the OPA, because
under section 5(1)(f) of the Electricity Act, it states that
one of the objects of IESO is:
"to collect and provide to the OPA and the public
information relating to the current and short-term
electricity needs of Ontario and the adequacy and
reliability of the integrated power system to meet
those needs..."
MR. VEGH: You are referring to the Electricity Act?
MR. CUNNINGHAM: Yes, section 5(1)(f). So is it safe
to say one of the OPA's role --
MR. VEGH: Give him a chance to read it.
MR. CUNNINGHAM: -- is to collect such information for
planning purposes, that is information on the current and
short-term electrical needs of Ontario?
MR. SHALABY: Yes.
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MR. CUNNINGHAM: Okay. That's for your overall
planning function; correct?
MR. SHALABY: It informs our planning function, yes.
MR. CUNNINGHAM: Then we have seen previously the
objects of the OPA outlined in section 25.2(1). That is:
"to forecast electricity demand and the adequacy
and reliability of electrical resources for
Ontario in the medium and long term..."
So you are to collect information on the short-term and
current needs of Ontario and then also you are to forecast
demand for the medium and long term; correct?
MR. SHALABY: That's correct. Elsewhere in the act it
talks about the IESO-controlled grid as the scope of
planning.
MR. CUNNINGHAM: Okay. Now, in terms of the OPA, we
have looked at other sections. We looked at section 25.29.
We have looked at section 25.30, in terms of the OPA's
mandate. I won't go over those.
We have looked at 424/04, the regulation. And we have
looked at 2(1)(1), that:
"The OPA shall, in addition to following the
minister's directives, consult with consumers,
distributors, generators, transmitters and other
persons who have an interest in the electricity
industry in order to ensure that their priorities
and views are considered in the development of the
plan."
Correct?
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MR. SHALABY: Correct.
MR. CUNNINGHAM: That would be basically almost every
consumer in Ontario.
MR. SHALABY: Correct.
MR. CUNNINGHAM: Okay. So what I would like to do is
to quickly look at NAN's evidence, in terms of what was said
to NAN by the OPA and by the Ministry. NAN's evidence is
found at Exhibit L, tab 18, schedule 1, page 21. There is
an excerpt here from a letter from the OPA to the Temagami
First Nations. I am looking at the second paragraph of that
excerpt.
MR. SHALABY: Give me a second, thank you.
MR. CUNNINGHAM: Okay.
MR. SHALABY: All right. I see it.
MR. CUNNINGHAM: Okay. The second paragraph of that
excerpt, it states, in part:
"It is a plan put together through the hard work
and utilization of the skills and experience of
many people to lay out a road map for the
development of electrical power in the province.
It is still up to each First Nation, each
community, each company participating in the
economic development of the province of Ontario to
decide how they wish to 'use the road map' to get
to a particular destination."
So would you agree that that language indicated that
this plan was going to be inclusive; right? First Nations
were going to be able to rely on this plan to get where they
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wanted to get, possibly, in the future?
MR. SHALABY: I indicated that the act also indicates
that the power system plan, the integrated power system plan
is to, the scope for it is the IESO-controlled grid.
MR. CUNNINGHAM: Correct.
MR. SHALABY: So it is inclusive. There's some remote
communities that are remote from the IESO-controlled grid
that are not subject to this particular plan. So subject to
that caveat, I'm agreeing with what you say.
MR. CUNNINGHAM: If we look at --
MR. SHALABY: First Nations that are on the IESO-
controlled grid are certainly part of the plan.
MR. CUNNINGHAM: But the grid as it looks today won't
be the grid that -- as it looks 20 years from now; correct?
MR. SHALABY: That may be true.
MR. CUNNINGHAM: So how can we take the current notion
of the grid to say to someone, over the next 20 years you're
not going to be part of the plan? Isn't part of the --
shouldn't part of the plan be to ensure these people get
connected to the grid?
MR. SHALABY: No.
MR. CUNNINGHAM: No?
MR. SHALABY: No.
MR. CUNNINGHAM: So your plan is just simply about
supplying resources; that is basically -- I have put in our
materials the philosophy of the plan seems to be: Ask not
what the grid can do for you but ask what you can do for the
grid.
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MR. SHALABY: No. I am disagreeing that the objective
of the plan is to connect everyone to the grid. There are
some communities that it is going to be very, very expensive
and very remote to connect to the grid. There are
communities that are being connected to the grid over time,
Attawapiskat, south all the way to the Moosonee, for
example, have been connected by a line built by Five
Nations. That has taken place over the last several years
and connected a number of communities.
There are other communities in the NAN territory that
are being connected, as well, two, in particular. So over
time, as economics permit and as use and options develop,
there will be connection to the grid.
But I would not say that one of the objectives is to
connect all of the remote communities. Some of them are
very remote and very small and probably the most economic
thing is to continue to be supplied the way they are, with
more effective technologies, perhaps.
MR. CUNNINGHAM: You are aware 26 of the 49 NAN
communities are not connected to the grid. Are you aware of
that?
MR. SHALABY: I am, yes.
MR. CUNNINGHAM: You are aware that the OPA, in answer
to interrogatories from NAN, indicated to them, in writing,
that, Oh, by the way, if you're not on the grid, you are not
part of our plan.
MR. SHALABY: That's what I am indicating. The scope
of the integrated power system plan is the IESO-controlled
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grid.
MR. CUNNINGHAM: Okay. Where do you find that in the
legislation or the regulations, that the people not on the
grid should be excluded from this plan?
MR. SHALABY: It's in the act. The definition of the
IPSP is the IESO-controlled grid.
MR. CUNNINGHAM: Well, I see the definition, but the
fact is your whole plan entails a different grid 20 years
from now than the one we currently have; correct?
MR. SHALABY: I can accept that, yes.
MR. CUNNINGHAM: Because you have transmission lines
you want to build.
MR. SHALABY: Yes.
MR. CUNNINGHAM: Okay. Well, why haven't you put in
your plan a plan to connect communities to the grid instead
of just connecting new generating sources to the grid so you
can bring the power down to central Ontario? Why isn't part
of the plan the development of the transmission system to
reach out to the outlying and remote communities?
MR. SHALABY: Panel, I described the focus of the plan
as the IESO-controlled grid. We are aware of the subsidiary
of Hydro One that delivers and services many of the remote
communities. The remote communities are partly serviced by
Hydro One subsidiary, and partly not. Some communities are
independent, supply their own power. So they can choose to
be served by Hydro One or not.
The Department of Indian Affairs has agreements with
many of the communities to supply power. It is that
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subsidiary of Hydro One that has a better knowledge of the
communities, and it receives directives and does connect
consumers to the distribution grid, the 44 kV system
typically. So it is lower voltages. It is remote
communities. We simply recognize the different nature of
the remote communities and it's a very different nature of
planning that the IESO-controlled grid.
MR. CUNNINGHAM: I am not sure you answered my
question. I just want to refer you to one last slide in my
questioning. Slide 65. Because this is right on point.
Would you agree over the next 20 years, the OPA is
contemplating developing considerable hydroelectric
resources in northwest and northeast Ontario?
MR. SHALABY: Yes.
MR. CUNNINGHAM: Slide 65 follows slide 63 and 64,
which show the cumulative development of these resources;
correct?
MR. SHALABY: Yes.
MR. CUNNINGHAM: Okay. Would you agree that the
objective, based on these diagrams, seems to be we'll
develop these power generating sources and we will get the
power down to central Ontario?
MR. SHALABY: Yes.
MR. CUNNINGHAM: What about all of the communities,
that are basically my clients, that lie around these two
sources to be developed? Where is the plan to connect them
to those sources of power? Would you agree there isn't one?
MR. SHALABY: I indicated that this was not the scope
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of the integrated power system plan, because it is looked
after in a different forum by different people, and we
didn't want to duplicate work that is done by other people
and is not our mandate to do.
MR. PIETREWICZ: Examples of work that is being done by
other people can be found, if it helps, in the OPA's
response to NAN Interrogatory No. 6.
MR. CUNNINGHAM: With the greatest of respect, that
wasn't my question. My question was: Why didn't the OPA
include in its plan transmission lines from these sources
that are going to be developed in the backyard of my clients
to connect my clients to those sources of power?
You are here to serve all Ontarians, all consumers.
You are supposed to have all of their interests at stake
when you develop the plan.
MR. SHALABY: I have answered the question more than
once.
MR. CUNNINGHAM: You can't point me to any regulatory
source that says you were to ignore the interests of my
client?
MR. SHALABY: I can, and I did.
MR. CUNNINGHAM: Well, I would like an undertaking for
you to identify those provisions.
MR. SHALABY: I can do it right now.
MR. CUNNINGHAM: Okay.
MR. SHALABY: It's in the act.
MS. NOWINA: Maybe Mr. Vegh can do it for us now. Mr.
Vegh.
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MR. VEGH: Thank you. I think Mr. Shalaby was
referring specifically to the definition of the integrated
power system in the Electricity Act, which reads as follows:
"The integrated power system means the IESO-
controlled grid and the structures, equipment and
other things that connect the IESO-controlled grid
with transmission systems and distribution systems
in Ontario and transmission systems outside of
Ontario..."
And then the IESO-controlled grid is defined in the
Electricity Act, as well. It's defined as:
"The IESO-controlled grid means the transmission
systems with respect to which, pursuant to
agreements, the IESO has authority to direct
operations..."
I think those are the sections that Mr. Shalaby was
referring to.
MS. NOWINA: Just so I can be clear, Mr. Vegh, so those
sections refer to the definition of the integrated power
system. It's not in the sections relating to the integrated
power system plan?
MR. VEGH: It's the definition of the integrated power
system, and if you go to section -- the term that is used in
the -- in part 2, point 2 of the act, it talks about the
integrated power system plan.
So if you look at the definition of integrated power
system, it is the IESO-controlled grid. So the integrated
power system plan is a plan for the IESO-controlled grid.
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MS. NOWINA: Thank you.
MR. CUNNINGHAM: I have one last question for Mr.
Shalaby.
Prior to the OPA answering the -- really I think it was
interrogatories 5 and 6 from NAN, where they indicated that
you are not part of the grid right now, so you are not going
to be part of our plan for the next 20 years.
Prior to them giving that notice, did the OPA ever
write to my client, during the development of the IPSP, to
tell them, Look, we have to tell you, 26 of your 49
communities, we're not going to be dealing with their
interests in terms of future power supply? Did you ever do
that during the process?
MR. SHALABY: We wrote to the communities, and the
supply of service is not limited to connection of
transmission lines to the communities. It is also inclusive
of the use of electricity, advice on conservation, advice on
renewable options, and there are channels and there are
programs for renewable options and for conservation of power
to these communities. So we did not write to that effect.
We wanted communities to be included in the discussion,
and that was the general communication, and that's described
in Exhibit C-1-1.
MR. CUNNINGHAM: Are you aware of the Minister of
Energy ever writing to our clients, during the development
of the IPSP, to tell them that if you're off the grid right
now, you are not going to be part of the plan?
MR. SHALABY: I am not aware of that.
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MR. CUNNINGHAM: Okay. Those are my questions, Madam
Chair.
MS. NOWINA: Thank you, Mr. Cunningham. Next, Mr.
Rosekat for the FNEA.
CROSS-EXAMINATION BY MR. ROSEKAT:
MR. ROSEKAT: Good morning, Mr. Shalaby. Sorry, I am
in the third row here, but I think we can probably see each
other. I just have a few questions about the procurement
process.
As with previous counsel, if my questions are too
detailed, which I somehow doubt, just direct me to hold my
questions for the procurement panel.
I am a bit confused, so you will have to pardon me if
my questions seem a little naive. The process that you are
asking the Board to approve is the one that is set out -- we
don't have to go to the document specifically, but the one
that is set out in Exhibit B-2-1. That's the process by
which the OPA determines, for instance, the type of
procurement, the design of the procurement, and what you
state as approvals, which I take to be OPA board of
directors' approvals for the procurement; is that correct?
[Witness panel confers]
MR. SHALABY: Yes.
MR. ROSEKAT: Just to clarify, because it is not always
clear from the evidence, the OPA's authority to procure
certain resources comes from having an approved IPSP or
government directives. The procurement process is simply
the mechanism by which those resources are procured?
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MR. SHALABY: That's correct.
MR. ROSEKAT: The Board's approval of the procurement
process doesn't grant the OPA any particular authority to
procure; correct?
MR. SHALABY: Together with the approved plan and the
directives, as you --
MR. ROSEKAT: But approval of the process doesn't give
the OPA any extra authority to approve?
MR. SHALABY: It gives it authority to follow these
processes in procurement.
MR. ROSEKAT: Right. The Board approval simply says,
This procurement process that you have put forward, we
believe it is appropriate?
MR. SHALABY: Correct.
MR. ROSEKAT: In determining whether the process is
appropriate, because that's what it says in the direction,
presumably the Board is looking to see that the process
complies with the procurement principles, for instance, set
out in the regulation?
MR. SHALABY: Correct.
MR. ROSEKAT: If we can just go to slide 113 of Exhibit
K1.1 for a moment?
I think it is fairly clear, but I just want to confirm,
the OPA seems to be saying in this slide that the
procurement process which you are asking the Board to
approve will not be used for procurements under government
directive.
For instance, if we take the 2,000 megawatt directive,
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procurements under that directive will -- because those are
all, you know, renewable supply procurements, right, they
will not follow the procurement process you are asking the
Board to approve?
MR. SHALABY: There is a procurement panel that comes
in that can -- the witnesses that described this part of the
overview are going to be appearing in a procurement panel.
They will get into that level of detail of what the process
is used for or not used for. Perhaps they will be better
able to describe what they intended in this.
MR. ROSEKAT: Absolutely. I am happy to save my
questions for the procurement panel.
In terms of -- I know -- in terms of the directives
that were issued for procuring certain renewable supplies,
for instance, do you know why these procurements might have
been issued rather than simply waiting to include them in
the IPSP?
MR. SHALABY: The urgency for needing the resources,
the timeliness of this process and the timeliness of the
need of the resources, it's just a --
MR. ROSEKAT: You needed to get going?
MR. SHALABY: The government felt that we have to get
going on them to have them in time.
MR. ROSEKAT: Thank you. Now, you indicated earlier -
I think you went over it with the Board Staff and probably
more than one lawyer who has cross-examined you, including
Mr. Cunningham, I think - the procurement process, there is
no automatic review after three years for the procurement
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process?
MR. SHALABY: You indicated we went through it. The
record stands. There's been a lot of discussion in that
matter, yes.
MR. ROSEKAT: Fair enough. I think your response to
that was your intention was to build enough flexibility into
the procurement process that constant reviews would not be
necessary; is that accurate?
MR. SHALABY: Would not be necessary, but we could come
forth if we feel it is necessary, yes.
MR. ROSEKAT: Can you give -- think of a hypothetical
example of what change might require you to come back and
re-review and re-approve the procurement process?
MR. SHALABY: Again, maybe the people who are more
expert in procurement processes and the nature of the
requirements that they're asking approval for can better
describe the anomalies.
MR. ROSEKAT: Fair enough, thank you.
Once you go through all of the elements of the
procurement process, the procurement is then launched and I
assume that the process continues into the next phase,
between a launch of the procurement and the award of the
contract. I want to sort of talk about this as the contract
award process, the phase of the process. It's still part of
the procurement, but the procurement process that you have
set up only sort of goes out to the design of the
procurement, deciding on the type of the procurement and
what approvals the OPA board has to grant. There is another
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sort of phase once you launch the procurement, there's the
RFP process, or the tendering or auction process. Right?
MR. SHALABY: Well, that is part of the procurement.
MR. ROSEKAT: That is part of the procurement. It is
not dealt with specifically in the process, I think, because
it may be a little more detailed than you wanted to get into
that in that.
But that process, that part of the process continues to
be part of the procurement is what you're saying?
MR. SHALABY: Yes.
MR. ROSEKAT: Then presumably, the principles set out
in section 3 of the procurement regulation would continue to
apply to that phase of the process? If you want to direct
your attention to the principles --
MR. SHALABY: You may be getting into a stage where the
procurement people are better able to answer that. You're
referring to regulation 426?
MR. ROSEKAT: I am.
MR. SHALABY: I would rather you ask these questions of
the procurement panel.
MR. ROSEKAT: Fair enough. Then perhaps we could go to
the transcript of day 3. You were being cross-examined by
Mr. Thompson. At page 125, I believe it is line 18 or 19.
Page 125.
MR. SHALABY: Yes. What part specifically?
MR. ROSEKAT: Line 18, Mr. Thompson says:
"So that to the extent, then, that the directives
trigger procurements that are outside of any
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regulatory screening, we don't have any
transparent planning or screening process that's
governing the customers' obligations to pay those
amounts; is that fair?"
Your response was:
"The board of directors acts in its capacity, in
its fiduciary capacity to screen and ensure that
these contracts are in the best interests of
consumers."
MR. SHALABY: Yes.
MR. ROSEKAT: My question to you is this: If the board
of directors is acting in a fiduciary capacity with respect
to consumers when it is deciding to award contracts under
directives, who is doing what would ordinarily be done under
the regulatory screening? Who is ensuring that the
principles apply to the procurement?
MR. SHALABY: Perhaps you can expand on what principles
and -- you can address that to the procurement panel
further.
MR. ROSEKAT: Fair enough.
MR. SHALABY: There's review here. What to purchase.
What to procure. How to procure it. There is a board of
directors that oversees the process. Perhaps you can be
more specific, what is it that...
MR. ROSEKAT: Sorry. I am still referring to the
principles in the procurement regulation and I am wondering,
I just wanted to expand on your answer a little bit. You
said the OPA board of directors are acting in a fiduciary
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capacity to customers.
My question is, as part of that responsibility, are
they also ensuring that the procurement principles set out
in regulation 426 have been followed, have been complied
with?
MR. SHALABY: The regulations govern the way
procurements are to be carried out and to be designed, and
the board of directors holds the staff accountable for
carrying out these processes, yes.
MR. ROSEKAT: So the answer is yes?
MR. SHALABY: Yes.
MR. ROSEKAT: Part of their role is also to make sure
that staff have done what they are supposed to do?
MR. SHALABY: Yes.
MR. ROSEKAT: Thank you.
Would it be possible, after the IPSP is approved, for
the government to continue to issue directives?
MR. SHALABY: We talked about that as well.
MR. ROSEKAT: And the answer was yes?
MR. SHALABY: The answer was yes, depending on whether
the initiatives are underway before the approval is granted,
or not. Generally that was the answer to that.
MR. ROSEKAT: Oh, I see. And I apologize, I did try to
read through most of the transcripts last night and the days
previous. But if the directives are outstanding, there is
the transition provisions, I understand.
MR. SHALABY: If the initiative is outstanding.
MR. ROSEKAT: If the initiative is outstanding?
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MR. SHALABY: Yes.
MR. ROSEKAT: Okay.
And I am going to be directing most of my questions to
the procurement panel, then, so those are the only questions
I have for you, Mr. Shalaby.
MR. SHALABY: I will let them know. Thank you.
MS. NOWINA: Thank you, Mr. Rosekat.
Mr. Keizer? GLPL? Not here. Mr. Gourlay?
MR. GOURLAY: Here, Madam Chair.
MS. NOWINA: Do you want to go ahead, Mr. Gourlay?
MR. GOURLAY: Yes, please, can you hear me?
MS. NOWINA: Yes.
CROSS-EXAMINATION BY MR. GOURLAY:
MR. GOURLAY: Good morning, gentlemen. In the early
stages of your cross-examination, Ms. Lea asked you whether
you were relying on the Hydro-Québec interconnection to meet
the 2010 goal, in terms of renewables.
Your answer was that under the revised numbers you
didn't need to. But would you agree with me that as the
IPSP was originally filed, you were relying on the 1,250
megawatts flowing through the Hydro-Québec interconnection
in order to meet the 2010 goal?
MR. SHALABY: Yes.
MR. GOURLAY: So I take it from that, that there is no
issue that renewable imports from Quebec, at least, fit the
2010 requirement of the directive, from your perspective?
MR. SHALABY: Correct.
MS. NOWINA: Mr. Gourlay, I'm sorry, for the record we
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should have mentioned who your client is. You are
representing?
MR. GOURLAY: Pardon me, Madam Chair. I am
representing Newfoundland and Labrador Hydro.
MS. NOWINA: Thank you.
MR. GOURLAY: As you will appreciate, most of my
questions will be directed towards the issues surrounding
the treatment of imports.
The rationale for treating the Hydro-Québec
interconnection as renewables, is that the predominant
source of power in Quebec is renewable energy. Is that
correct?
MR. SHALABY: Yes.
MR. GOURLAY: Now, if power were to come from another
source, for example, a source in Labrador, and be, for
example, wheeled through Quebec, would there be an issue as
to those imports from that source meeting the requirements?
MR. SHALABY: No, there would not be.
MR. GOURLAY: Thank you.
MR. SHALABY: And that happens today. A large amount
of the electricity on the Hydro-Québec grid comes from
Labrador.
MR. GOURLAY: Thank you. Now, in the plan, it says in
various places that if a long-term import agreement were
entered, that power could substitute renewable energy in the
plan.
MR. SHALABY: Renewable and non-renewable.
MR. GOURLAY: Would it then fit the supply mix
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directive goal for 2025?
MR. SHALABY: If it is a firm purchase and can be
demonstrated to meet the requirements and use in Ontario,
then that's the way it will be interpreted, yes.
MR. GOURLAY: I see. I am perhaps a little confused,
but when you were speaking with Mr. Buonaguro on Thursday,
you stated that imports would not -- would count towards the
2010 goal but not the 2025 goal.
MR. SHALABY: We described the difference in language
in the directive that we interpreted capacity. The word
"capacity" is used to meet the 2010 goal and the words
"energy use in Ontario" is used to describe the 2025 goal.
For that reason we treated the two slightly differently.
MR. GOURLAY: I see. But what you're telling me now is
that if a long-term agreement were entered, there wouldn't
be such an issue. It would be treated as energy used in
Ontario?
MR. SHALABY: Yes.
MR. GOURLAY: So it would fit the 2025 goal. Thank
you. That clarifies things.
Now, in determining which resources would be used to
fit the renewable criteria of the supply mix directive, you
performed an analysis of all of the LUECs of renewable
sources in Ontario?
MR. SHALABY: We went through the evaluation of the
various renewable sources, including conducting a levellized
unit energy cost analysis, but other things, as well.
MR. GOURLAY: But in the LUEC analysis, which is what I
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am interested in, you didn't include imports. I am
wondering why that would be.
MR. SHALABY: We do not know what the levellized costs
of imports will be until we have a better agreement or a
deal with a counterparty. I mean, the levellized unit
energy cost is a cost of a resource. It's not necessarily
the agreed-on price for transferring that resource in
Ontario.
So knowing the cost of developing something in
Newfoundland or in Labrador or in Quebec or in Manitoba is
not sufficient information to indicate how will it be
transferred to Ontario, under what conditions.
MR. PIETREWICZ: This is generally described in Exhibit
D-5-1 on page 13, that precise point.
MR. GOURLAY: Yes, thank you.
So the issue you are describing is summarized in the
plan, I think, as uncertain economics and feasibility. That
phrase is used. Is that the same thing that you are
describing to me now?
MR. SHALABY: And also the reaching of a commercial
agreement. That's another level of consideration when
looking at transactions with other provinces.
MR. GOURLAY: Presumably a commercial agreement would
take care of the other issues, the uncertain economics and
feasibility?
MR. SHALABY: It will narrow that scope, yes. Yes.
MR. GOURLAY: May I ask you to turn up Exhibit B-3-1,
please? I am interested in table 2, page 12.
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MR. SHALABY: I don't go anywhere without it, so I have
it here.
MR. GOURLAY: You probably already have page 12 tabbed.
So this table sets out the six criteria that you used
obviously in developing the plan.
I am interested in components of feasibility, which are
described, I believe, in the description column. Would you
agree with me that those are the components that you used to
determine feasibility? Am I understanding that correctly?
MR. SHALABY: We described in the section some more
texture to this. So section 4.1 at the bottom of this page
described feasibility with more words. That includes more
texture to how we use that criteria. So, yes, that is
indicative. There is more description in the section, and
there is more discussion that we had here over the last week
or so.
MR. GOURLAY: Certainly I appreciate there has been
more discussion, as well, here. I am looking for a summary
that we can use.
Let's start with the table and we will turn to the rest
if we need to.
MR. SHALABY: That's fine.
MR. GOURLAY: When it says in the IPSP that imports are
of insufficiently certain feasibility, which of these
components of feasibility come into play? There is
technical feasibility, commercial availability,
technological maturity, which I assume is not in play --
MR. SHALABY: We described --
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MR. GOURLAY: -- and lead time.
MR. SHALABY: It depends which purchase. We talked
about the Manitoba purchase lacking sufficient
infrastructure at this time to deliver the purchase in the
size that people discussed over the last two or three days
all the way to the load centres.
MR. GOURLAY: Let's talk about an agreement to import
energy from the east, either Quebec or Labrador.
MR. SHALABY: As of 2009 and 2010, then it is the
commercial availability of terms and conditions for the
import that would be the uncertainty at this stage.
MR. GOURLAY: And longer term, I take it commercial
availability would be taken care of by a long-term contract?
MR. SHALABY: If a contract is reached, then that would
be the case, yes.
MR. GOURLAY: Okay. In developing the plan, you stated
that you go through -- you take a resource, as I understand
it, and you go through the six criteria starting with
feasibility. And if a resource doesn't pass the feasibility
test, you don't go on in your analysis?
MR. SHALABY: That's generally true, yes.
MR. GOURLAY: Can you take me through the next steps,
though, in terms of a long-term agreement to import energy
from the east? If an agreement is reached, would you agree
with me that that would be -- that would satisfy the other
five criteria -- excuse me -- yes, the planning criteria on
this table?
MR. SHALABY: If an agreement is reached, we will -- if
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it's reached, then we will ask ourselves, Is it reliable?
Is it flexible? Is it cost-effective for Ontario?
But the conclusion you describe, you describe a journey
that will pass through all of these criteria, yes.
MR. GOURLAY: So the journey, by that you mean the
process, the thought process the OPA would take or some
other body would take in entering such an agreement; is that
what you mean?
MR. SHALABY: Yes.
MR. GOURLAY: Okay. As a resource, as a source of
renewable energy, are there issues with respect to these
other five criteria?
MR. SHALABY: There are issues, yes. I mean, a source
of renewable energy can be reliable or unreliable, depending
on the terms and conditions of the contract. It can be
cost-effective or not cost-effective, depending on the terms
and conditions of a contract.
So the fact that it is a renewable energy source is not
enough to describe whether it is going to be reliable for
Ontario or not, flexible for Ontario or not, cost-effective
for Ontario or not.
There are other considerations that have to complement
the fact that it is renewable to make it meet these other
requirements.
MR. GOURLAY: And in a plan, is that what you describe
when you say the economics are uncertain?
MR. SHALABY: Yes.
MR. GOURLAY: Thank you.
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You will agree with me that there are other components
of the plan that are currently uncertain that aren't subject
to contracts?
MR. SHALABY: We agree that all parts of the plan are
uncertain -- have levels of uncertainty around them, yes.
MR. GOURLAY: In a previous examination, you compared
imports to a single-source procurement, and you said that
there was an additional level of complexity when you are
dealing with imports. Do you recall that?
MR. SHALABY: Maybe provide me a bit more context to
remind me, if you could.
MR. GOURLAY: I am asking you for a bit more context,
but let's --
MR. SHALABY: What is the essence of the question?
MR. GOURLAY: The essence of the question is I am
asking whether imports are of a similar nature to a single-
source procurement, in your view, in terms of uncertainty.
MR. SHALABY: It is a single-source procurement. It's
a different nature than single-source procurement of a
demand reduction contract or a natural gas-fired generating
station. It's a different product.
MR. GOURLAY: How is it different from a procurement
for Ontario-based hydroelectric generation?
MR. SHALABY: The transmission -- the delivery of the
product to Ontario loads, if the hydroelectric station is
developed within Ontario, the transmission is subject to
market rules and regulatory oversight within Ontario.
If the delivery is from outside of Ontario, there is an
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added layer, a set of rules and conditions, as an example,
of a difference between a station located outside of Ontario
and a station located inside of Ontario.
MR. GOURLAY: Is that what you meant when you referred
to an added layer of complexity when you are dealing
with --
MR. SHALABY: That is one dimension, one dimension.
MR. GOURLAY: Are there other dimensions?
MR. SHALABY: There are, yes.
MR. GOURLAY: What are the other dimensions, please?
MR. SHALABY: Dispatchability of the resource may be
different. Long -- the length of the contract or the
continuity of the resource to serve Ontario customers would
be subject to different terms and conditions. Those are a
few --
MR. GOURLAY: Most of those would be presumably dealt
with by way of a contract if it comes to be.
MR. SHALABY: Yes, yes. It can be dealt with. And
your question is whether it is different than a resource
developed in Ontario and it will have a different flavour to
it, a different nature to it.
MR. GOURLAY: One final area of questions. I take it
that imports were not considered for base load in a plan?
They're only being considered for intermediate and peaking
resources; is that right?
MR. SHALABY: We recognize that the value of imports is
higher if it displaces intermediate and peaking resources.
They could be used for base-load resources. Their value is
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higher if they're used for intermediate and peaking
resources.
But they come in different varieties and depending on
the time period they come in and depending on how large or
small they are, they could be base-load replacements. They
could be intermediate and peaking replacement.
So they come in all varieties.
MR. GOURLAY: So you are not ruling out base loads down
the road?
MR. SHALABY: We're not.
MR. GOURLAY: The reason you say it is higher in value,
is that because of the flexibility they lend to the plan?
MR. SHALABY: No. Because the -- the marginal cost of
the resources that are intermediate and peaking is higher
than the marginal costs of the resources that are base load.
So if we had to buy something, let's buy it in a hot
summer day rather than in a cool May night. It has more
value to Ontario in a hot summer day than a cool May night.
MR. GOURLAY: Is that based on the cost assumption,
then? You are assuming that there would be of higher cost
than --
MR. SHALABY: Higher than, talking about the value to
Ontario. It would displace a resource that is higher cost
in Ontario. Or cause us not to build a resource that is
higher cost in Ontario.
MR. GOURLAY: But my question is really why you're
saying that it is higher value. Is that based on an
assumption that they would be higher cost than base-load
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resources?
MR. SHALABY: Yes.
MR. GOURLAY: Okay, thank you. Those are my questions.
MS. NOWINA: Thank you, Mr. Gourlay.
The next I have on my schedule is Ms. Dover from the
Provincial Council of Women. Ms. Dover, maybe we will take
our morning break early so you can start and complete in one
round.
If any of you know the whereabouts of Mr. Keizer of
GLPL, you might alert him that we have missed him. We will
catch up with him later, if he can be here before lunch
break hopefully. Thank you.
MS. NOWINA: We will adjourn until 10:30.
--- Recess taken at 10:16 a.m.
--- Upon resuming at 10:38 a.m.
MS. NOWINA: Please be seated.
Ms. Dover, you can go ahead.
CROSS-EXAMINATION BY MS. DOVER:
MS. DOVER: Good morning, Madam Chair, Panel Members.
Mr. Shalaby, I want to begin with two quick notes of
introduction, if you will permit me. One is to remind you
the Provincial Council of Women of Ontario is broader than
merely an environmental group; not to diminish the
significance of those groups, but we certainly consider
ourselves as broadly representing the public, and our
membership includes thousands of Ontarians and we are
organized through associated provincial organizations, as
well as local councils, as a point of introduction.
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The second is by way of introduction to my questions to
you, is that after having the opportunity to receive
guidance from the Board as to the style of questioning, I am
going to attempt to put my cards on the table with you and
ask you to comment on things. I am going to ask you to give
me direction as I go through my questions that if you are
not clear where I am going on a question, it's not my
intention to try and corner you, but merely to put some
issues out there and provide you with an opportunity to
respond.
I am going to ask you some questions about
sustainability, generally, and then about planning criteria.
There is some opportunity in going later in the order of
cross-examination, however I am going to confess to some
serious confusion on our part that I am looking to you for
guidance on as to what the methodology of sustainability
was.
So I am sure you will agree with me that sustainability
is a cornerstone of this review process, and it is important
that we be very clear as to what the methodology was. So I
am going to begin at the beginning, if you will, which is:
What is the proper definition of "sustainability" that
should guide the Board in their review of environmental
sustainability vis-à-vis the plan?
And to this extent, I am going to ask that the screen
display C-10-1, page 9, and of course I am going to
discussion paper 6.
MR. SHALABY: What page in that paper?
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MS. DOVER: Page number 3. It's under the heading 2.1,
"Concept of Sustainability". And if you will permit me to
read into the record as you are going to the reference,
there is very helpful guidance here indicating that:
"Defining sustainability" - and I am reading
here - "...has been challenging because it depends
on values and perspectives of various stakeholders
that are subject to change over time. As noted in
one of the more current and comprehensive works on
the subject, many variations of sustainability
have been applied in practical initiatives while
researchers have spent years pursuing a robust
definition. The results have been both diverse
and at time conflicting."
The paper goes on at the last paragraph to site a
definition. So I think the paper is wise, beginning a
discussion of sustainability, by saying this is hard from
the start, in terms of defining what the ultimate goal is of
sustainability.
The paper then provides some history around the
definition of sustainability, citing the 1987 definition in
the last paragraph and turning the page over to page 4,
citing the Earth Summit definition, which reads:
"In order to achieve sustainable development,
environmental protection shall constitute an
integral part of the development process and
cannot be considered in isolation from it."
Now, Mr. Shalaby, I don't mean to take you to where
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many other questioners have gone, in terms of asking you to
elucidate how the planning criteria operates. I mean to ask
you a predicate question. What is the definition of
sustainability that the OPA intends this Board to be working
with?
MR. SHALABY: Well, just having finished saying it is a
hard concept and a -- it requires attention to multiple
aspects of development, of planning, and we distil these
requirements in the evidence that follows this and is in
section B-3-1.
So rather than defining it in quotes-unquotes and --
there is lots of definitions. Rather than do that, we said,
What do you have to do to be moving towards sustainability?
So we went into -- from seeking a definition to seeking
how would you apply some of the principles. What do you
need to consider so that your planning is moving towards
sustainability? And that's what we locked onto, and those
are the requirements that we explained in our evidence.
MR. VEGH: Madam Chair, not to interrupt, but just for
clarification, the Board has provided a definition of what
it means by sustainability, and so the important decider
here is the Board. And the Board indicated, in the filing
guidelines at Exhibit A-3-1, page 29, that it defines
environmental sustainability as follows:
"Environmental sustainability refers to
development that ensures that the needs of the
present are met without comprising the ability of
future generations to meet their own needs."
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MS. DOVER: Well, with respect, Mr. Vegh, I am not
asking Mr. Shalaby to give a legal definition as to what the
definition of sustainability is that the Board should
advance in its ultimate decision. I am asking Mr. Shalaby
to elucidate what definition of environmental sustainability
the OPA used in developing the plan, which I think speaks
more to what the ultimate test is that the Board will apply
in regards to whether or not the OPA sufficiently weighed
and evaluated sustainability.
I am not entering an argument here as to what the
proper legal definition of sustainability is. I am asking
Mr. Shalaby to elucidate the thinking of the OPA around the
definition.
So perhaps with Mr. Vegh's helpful direction, I will
redirect a more specific question to Mr. Shalaby.
Is the Board's definition of sustainability, which is a
restatement of the 1987 Brundtland definition of
sustainability, is that -- is that also the OPA definition
of sustainability, in terms of capturing the ultimate goal
as implemented through the six planning criteria?
Is the Board's definition of sustainability the OPA's
definition of sustainability in terms of helping the Board
understand what guided your overall approach to
sustainability?
MR. SHALABY: What I am indicating is the definition
can only take you a certain distance. We were seeking
practical guidance on how to develop an integrated plan. So
we were seeking translation of a definition with something
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that we can work with in developing an integrated plan.
So definitions that have stood the test of time are the
Brundtland definition that was adopted by the Board.
They're interpreted in requirements that are stated, and
interpreted further in the criteria that we developed.
So it's a way of making the definition operational,
making the definition meaningful to the planning exercise.
That's what we attempted to do.
MS. DOVER: Thank you for that. I just want to make
sure that I understand what the methodology is. If I am
understanding correctly, the methodology for sustainability,
the overall investment of the OPA methodologically, if I can
put it that way, was not in an ultimate definition, but in a
process represented by the six criteria. Do I understand
that correctly?
MR. SHALABY: That is a good description, yes.
MS. DOVER: Okay. So I want to then go back to page 3,
if I could just ask for the screen to be scrolled back once,
and I am going just to the paragraph after that that I cited
that begins, "Many interpretations". And it signals here:
"Many interpretations will always exist, but
almost all involve the simultaneous consideration
of economic, social and environmental
imperatives."
Now, I want to refer, then, to the -- Mr. Crocker was
kind enough to ask you some questions in regards to the
implementation of the six criteria, and I think most
questioners have gone through how sustainability is
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reflected in each one of the criteria. And I must admit I
have some temptation to go there later on in my questioning,
but at this point I want to ask you: If it is true that
almost all involve the simultaneous consideration of these
imperatives, how does that normative approach to
sustainability square with the filtered application of the
six planning criteria?
If it is usually done as a harmonized analysis, how,
then, does that -- I mean, what comments could you provide,
what insight could you provide to the Board about how that's
the way it is normatively done versus your approach that, in
effect, priorized (sic) the first three planning criteria,
and then implemented the three following?
MR. SHALABY: The reference here is that environmental,
social and economic considerations be considered together.
That's one thought. Considered these three together, not
separately.
The criteria that we apply in developing the plan and
evaluating the plan and describing the plan are considered
together. I said that several times. We are not attempting
to consider one criterion in exclusion to the -–they are
considered together.
Whether you go through them sequentially or not, that
doesn't mean they're not considered together. They're all
considered, and we met them all in developing the plan that
we present here today.
MS. DOVER: Okay. In the interests of time I'm not
going to direct you to the pinpoint, but for reference in
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the transcript, I am referring to cross-examination that
happened on September 9th in response to Mr. Crocker's
question at page 46, line 14, where clearly there was a
filtered approach, where, for example, of the six planning
criteria we don't have six equal citizens here. We have
three priorized criteria, which are, in effect, threshold
criteria that are applied, for example, prior to cost
environmental protection and societal acceptance.
Now, I don't mean to be quite as argumentative as the
tone of my questioning is taking, because what I mean to ask
you is to take a moment to reflect in terms of
sustainability methodology, that if it's normally done, a
simultaneous consideration, your process, in terms of the
methodology, is priorizing the three first planning criteria
after -- or prior to.
So the risk is that the sustainability analysis is
disaggregated. And I am asking you to reflect upon that
priorization process as potentially compromising a potential
sustainability outcome.
MR. SHALABY: I am trying to think where the
compromises might be and I am trying to think how we can
truly simultaneously, as in the same instant in time, do all
six. I mean this only happens in karate movies and things.
I mean I don't know how can you do that. You go
sequentially through things. You iterate. There are
iterations. Simultaneous consideration means considered
together but not necessarily at the same stage, the same
time.
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We talked about iterations. We talked about going
through a process and coming back and checking over -- for
example, reliability is done in a way that – iteratively.
Will this transmission line mean this area of the province
is reliably supplied? If not, we go back and do something
else and we keep it rating until it is reliably supplied.
So, simultaneous doesn't mean -- it means by the time
you are done, you have considered all of the considerations
by the time you come out of it.
MS. DOVER: Okay. I believe, if I pursue any further,
that I am really being redundant to the other questions.
Just by way of summary of this issue, here's my concern: I
will meet you on the karate metaphor and raise you a
chocolate cake metaphor. Is that if I am baking a chocolate
cake, and I separate the chocolate from the flour and eggs,
and then I cook up the eggs, I've got an omelette not a
chocolate cake.
So the concern is, if the six criteria are intended to
be your sustainability methodology, but you stop potentially
after an analysis of the first threshold criteria, don't you
have a sustainability process which is an omelette and not a
chocolate cake?
MR. SHALABY: Well, we're even now on the...
[Laughter]
MS. DOVER: I'm not sure if we're even or if I win, Mr.
Shalaby.
MR. SHALABY: I am anxious to go with the third one.
MS. NOWINA: I can't wait for the next one.
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MS. DOVER: So Mr. Shalaby, part of my interest, in
terms of -- I mean obviously, our hearts and minds in the
PCW are within what the ultimate outcome of the
sustainability analysis is, but the Board has give us some
indication in their issues decision that what we're looking
for in the sustainability analysis, the Board describes as
the test. And the test I am citing from the decision says,
the test is not whether the IPSP is environmentally
sustainable, but whether the OPA considered environmental
sustainability.
So insofar as I am trying to be clear as to what the
methodology for sustainability is, I think that's key. And
part of my concern around the criteria, a potentially lack
of symphony amongst the criteria relates to the prefiled
evidence at A-2-2, page 18.
So this is the document titled: "Relationship of the
OPA Planning Criteria and the OEB Review Criteria." So we
signalled now, we've covered in cross-examination, we don't
have a clear definition of sustainability, but the
sustainability methodology is housed within six criteria.
What is the implication for the Board's review of those
six criteria? Because there's some suggestion here, in A-2-
2, that the Board's job, in the opinion of the OPA, is not
to evaluate whether or not there is a symphonic result, in
terms of sustainability of the six criteria, but there is
actually different standards of review associated with each
one of the six criteria.
I am going to acknowledge that the OPA did not have the
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benefit of the Board's decision on issues while making this
document. So I am going to ask you now, with hindsight,
having the benefit of the Board's direction in terms of the
test for sustainability, and I am going to ask you to
reflect then upon table 3, which clearly lays out that there
is a different legal standard of deference associated with
different components of the planning criteria.
MR. VEGH: If I can address this, Madam Chair, because
I think we are getting into -- we discussed A-2-2, but there
is a specific legal underpinning to the question, and I
think it goes to stepping back a bit and looking at the
Board's mandate, because this is what this document relates
to.
In particular, what this relates to is the Board's
mandate is to determine compliance with the directives and
economic prudence and cost-effectiveness.
The question of sustainability comes up in the issue of
compliance with the directives and the question there for
the Board is, in a sense, the compliance question on
sustainability. Did the OPA consider sustainability?
And the OPA's evidence, with respect to its
consideration of sustainability, is described here and the
evidence is given specifically elsewhere.
With respect to the planning criteria specifically, the
evidence is that the planning criteria took sustainability
into account.
So the issue for the Board is whether or not -- whether
or not that was adequate. Does that demonstrate adequate
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consideration of sustainability?
I think the question of whether or not the plan is,
itself, sustainable, which is a separate question, which I
think counsel is really addressing, is an issue that the
Board said in the issues decision it will not be addressing.
The criteria for the Board is whether the plan is
economically prudent and cost-effective and that may well be
different than the requirement, the criteria of
sustainability.
What this paper tries to do is link up the two a bit,
the planning criteria, the OPA's planning criteria and the
Board's review criteria, but the two are still different.
The Board's criteria for reviewing sustainability is
with respect to whether the OPA considered it. You have the
evidence on how the OPA considered it and you will determine
whether that is adequate.
The next question, then, is, having done that, the next
question is: Is the plan economically prudent and cost-
effective?
And that, of course, contained its own terms that have
to be defined. I think the Board has defined what it means
by economically prudent. It is largely caught up within the
idea of flexibility. That's pretty clear in the decision.
And the Board -- that's clear in the decision and in the
guidelines. And the Board has given its indication of what
cost-effectiveness means, which is overall lowest cost on a
per-unit basis. And that's made clear in the guidelines, as
well.
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So all of this is to say that the way in which these
concepts are brought into the Board's review are A, largely
a matter of legal interpretation. I think many of these
legal rulings or findings have already been made. Well, I
will leave it at A, then. That's what I wanted to say in
respect of this point.
So I think counsel has made a good point. I am not
saying the witness can't respond to it, but there is a
context that I thought would be helpful to set out.
MS. NOWINA: I will respond to you, Mr. Vegh, so we're
very clear. I agree with you completely in that the issues
decision says that and the issues list says the same, that
our jurisdiction is to determine whether or not the OPA
considered sustainability, not to determine whether or not
the plan is sustainable. So that is clearly the issue
before us.
I did not believe that Ms. Dover's questions were
straying from that. I didn't have any indication of that.
And I think it is very important for us to understand
how -- the OPA's criteria and how they applied them in order
for us to make that judgment.
Ms. Dover.
MS. DOVER: So I apologize if some of my questions are
simply self-indulgent attempts to seek some clarity on my
own part, but so that I am -- I want to make sure that I
understand, Mr. Shalaby, what the methodology of
sustainability is that you are asking the Board to give
direction, potentially approve of.
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So what we have covered so far is that it is not driven
by definition. It includes six criteria. What I am asking
now is: Do you expect the Board to be evaluating those
criteria equally, identically, in a similar way, or do you
expect the Board to place more or less emphasis on some of
the criteria than others?
MR. SHALABY: I think what we're describing here is a
product, a plan that is a product of using these criteria,
and the criteria is the product of considering
sustainability and considering integration.
The Board is examining the plan for cost-effectiveness
and for economic prudence. So whether the Board is
examining criteria or examining the product that the
criteria resulted in, I suspect the Board is examining the
plan and whether it is economically prudent and cost-
effective.
MS. DOVER: Okay, Mr. Shalaby, I think we have probably
canvassed that area thoroughly, so I am going to move
forward to ask you some questions on specific planning
criteria.
When I go to ask the questions about the specific
criteria, my intention is to be providing greater insight
and greater clarity on the overall methodology of
sustainability.
So if I could ask for slide 9 from K1.1, please, to be
illuminated?
Just by way of introduction, are the planning criteria
-- are the planning criteria the sustainability process or
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the planning process with sustainability components?
MR. SHALABY: The planning criteria are the context-
specific guidance that planners use to develop plans and
evaluate plans.
MS. DOVER: So did you have another process that you
called planning and this was your sustainability analysis,
but there was a different process called planning?
MR. SHALABY: There was no different process than we
described here.
MS. DOVER: So your planning process and your
sustainability process were the same one?
MR. SHALABY: Sustainability was considered in
planning.
MS. DOVER: Okay. So your planning process has
sustainability components, then?
MR. SHALABY: We described that in Exhibit B-1-1. That
and integration were the two -- the two considerations in
developing the plan. How to integrate the options over time
and over geography, and how to consider sustainability in
developing the plan, those two things develop the plan.
MS. DOVER: Here is my confusion, though. What is the
sustainability methodology that you are asking the Board to
give you guidance on, because what I hear is that your
planning process was your sustainability process?
So, for example, Mr. Shalaby, at the fear of one-upping
my chocolate cake analogy, if I balance my chequebook at
home, can I call that a sustainability process? We have
problems if there is -- if the same process for planning
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quacks and waddles like your sustainability process, because
then how does the Board look to anything definable,
distinguishable to say, That was the sustainability
methodology, that was what was considered and we're going to
approve or give direction of that? Otherwise, they're just
looking at your planning process.
MR. SHALABY: I will define what we meant by the
planning process. I will take my take on some of the issues
that you raise.
The planning process is defined on the first page of
Exhibit B-3-1, and we talk about the stages in the planning
process, defining and developing the goals, developing the
plan, reviewing the plan. And the fourth part of that is
implementation by multiple parties.
We talked about that. That is the planning process.
It starts by defining goals, developing a plan to achieve
these goals, reviewing the plan to see whether it complies
with the directives and whether it is economically prudent
and cost-effective. That is the planning process that we
talked about.
MS. DOVER: Okay, I am going to --
MR. SHALABY: Now, when we go to plan development, we
say that we relied on sustainability thinking and we relied
on integration as the two drivers or two ingredients that
came together to develop the plan, which is the middle part
of the planning process, the middle part meaning between
defining goals and between review.
So that's how I place sustainability requirements and
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how they were considered in the planning process. It's in
the middle part, and it's one of two things that we
considered. The other one was integration.
MS. DOVER: So I think -- and I apologize. I am going
to come back to my question that is on the screen right now,
but I am actually -- just to follow up on Mr. Shalaby's
response, I think my concern was highlighted in the response
to some questions that Mr. Crocker had in regards to the
applicability of sustainability in the context of
reliability.
I am referring now to the transcript of September 9th,
and I am going to take you there. My apologies. This is at
page 37, line 15. So this was the question that Mr. Crocker
had about how sustainability is applied in the context of
reliability, and I would suggest that another way of putting
that question is: What is the distinction between
sustainability and reliability that you considered, not in
terms of what is the sustainable outcome, but of just trying
to trace what the sustainability methodology was here?
The response to Mr. Crocker's question was, and I will
read into the record:
"Sustainability requires that people have access
to what they need to do to live well and to live a
productive, safe and healthy life, and electricity
certainly does that and provides reliability
electricity everywhere in Ontario for every time
period between now and 2025. It certainly
contributes to that requirement."
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So I can't -- here are my cards on the table I am going
to ask you to comment on. I can't tell the difference
between electricity is good and a sustainability process,
because it seems like what is reliable is sustainable. That
seems to be the OPA application of the reliability process
in the context of sustainability.
So that's my concern. I am going to ask you -- invite
you to comment on it.
MR. SHALABY: The quote that you read in the record
indicates that a reliable system contributes to livelihood
and sufficiency, contributes to sustainability. It's not
the entire story. It is not the only thing to consider, but
reliability contributes to sustainable requirements --
sustainability requirements in Ontario in the context of
electricity, in the context of the 20 years to come.
So it's not the only -- it is not synonymous with
sustainability. It is not a sustainability process, but it
contributes to livelihood and sufficiency. That was the
point that we are trying to link from sustainability
requirement to the criteria that we use.
The context came later, in discussions last week,
reliability is as olds as the hills. It is the criterion
used for the last 30 years, 40 years, more. What is new
about that? We said there is nothing new about that, but it
does link to the concept of sustainability, in that it meets
a substantial requirement for providing people with
livelihood and opportunity for economic growth and for
comfort and safety.
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MS. DOVER: That is helpful, Mr. Shalaby, and I will
just -- obviously I am going to have a template concern.
If I come back to the issue of methodology, of giving
the Board some clear territorial lines around what the
sustainability methodology was, but I am going to now go
back to slide 9 -- and my apologies for going down the
garden path there a little bit.
In the context of feasibility, under the first bullet
point there is a dash line: Timing. And in the context of
your explanation around timing, you meant clearly timing
means timing for approval.
You have indicated as well in cross-examination that
the time to construction for nuclear facilities is
approximately ten years. I am going to ask you to give
further -- we have in evidence, we have in cross-examination
some general identification of other authorities that are
involved in the approval process for building new generation
for nuclear. But what I am asking you for is greater
specifics. Because in the context of feasibility, we need
to ask the question: Can new nuclear generation get
approved within the time that we have designated for
construction?
So I am going to ask you just an open-ended question.
Of the ten years, how much of that is for approvals? And
secondly, will the OPA undertake to provide whatever
assumptions it is using for the regulatory roadmap that must
be traversed in having new generation brought online?
MR. SHALABY: The details are numerous, but roughly
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speaking, there are four years for approvals prior to
beginning of construction, six years for construction, in
that ten-year time period assumption. Roughly speaking,
that's the planning assumption at this stage.
As to the detailed road map, that is multiple
approvals. I mean, this is not a single approval. We
approve safety reports, environmental assessments, zoning
and municipal approvals. There is a large number of
approvals that are undertaken and they're underway today by
both Bruce Power and Ontario Power Generation for licensing
and for permitting of either refurbishment or new build at
the sites that they're applying for.
So these processes are underway. They're started.
They started a year ago and -- for both the Bruce site and
the Darlington site.
MS. DOVER: I am sure -- you know I'm going to resist
any reference to history, but I am sure you will understand
my concern, in terms of the regulatory process being a
potential barrier for implementation. Because while I am
sure you were involved in trying to design what the
regulatory road map will be in terms of your strategies,
everybody else in the room is also involved in trying to
design what their various strategies are. So in the
interests of transparency and in the interest of determining
whether or not the OPA adequately considered a proper time
frame for a regulatory road map, will you make an
undertaking to provide the Board with what your assumption
was for the regulatory road map for new generation?
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MR. SHALABY: Give us a second to see whether we have
it in evidence or not. If we don't -- the last thing the
world needs is another set of regulatory roadmaps but if we
need one, we will provide one.
[Witness panel confers]
MR. SHALABY: We can certainly undertake to provide you
with the assumptions we made, in terms of -- I am reluctant
to accept road map without further elaboration.
Our interest is: How long would it take to have
nuclear on line by 2018 or 2017 or 2020 – 2029? Our
interest is the length of time it takes between now and the
first nuclear power on line for new build or refurbishment.
We can give you the assumptions, but the complexity of
approvals is something we acknowledge, and something that we
say that proponents go through and we can enumerate some the
approvals but not all of them, and not describe it in detail
that we're not familiar with.
So we can give you the assumptions we made. Why we
think four years is the time it might take. Why 2018 is a
reasonable assumption for first power, if that is what
you're looking for.
MS. DOVER: That is what I am looking for and that
would be helpful, Mr. Shalaby.
MR. SHALABY: It would come from some of the
discussions we made in 2006, 2007. We can undertake to do
that.
MS. DOVER: Thank you.
MR. RICHMOND: That would be Undertaking J6.1, and it
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would be the assumptions utilized by the OPA to meet the in-
service date for is it new build --
MR. SHALABY: New build for 2018.
MR. RICHMOND: To meet the new build in-service date of
2018.
UNDERTAKING NO. J6.1: TO PROVIDE THE ASSUMPTIONS
UTILIZED BY THE OPA TO MEET THE NEW BUILD IN-SERVICE
DATE OF 2018
MS. DOVER: My question really is an opportune
introduction, by way of my question, in regards to
flexibility.
What is the plan if the federal environmental
assessments are not approved?
MR. SHALABY: We will consider that as we know that the
federal environmental assessment not approved, meaning a
specific site is not approved? Or meaning what is not
approved?
MS. DOVER: The two environmental assessments, the OPG
and Bruce environmental assessments, that are underway now.
MR. SHALABY: Yes.
MS. DOVER: Have you made a presumption that those
environmental assessments will be approved? It is underway.
MR. SHALABY: Yes.
MS. DOVER: What if they don't meet the criteria
required by CEAA; what's the plan?
MR. SHALABY: One of several things can happen at that
stage. One is typically the proponent would seek direction,
what will make them acceptable: accommodation, changes in
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plans to make them acceptable, or move on to another site if
the site is not acceptable or moving on to another
technology if this technology is not acceptable.
So depending on the reasons why it is not acceptable,
we will deal with that when we get to know what those
reasons are.
MS. DOVER: Okay. So I want, then, to ask you a couple
of questions about costs. My point of departure here is the
Board's decision at page 38, where the Board has given
specific direction, if I am not mistaken, in response to the
PCWO's submission on issues, the Board indicates that it
finds a review of the OPA's consideration of sustainability
could include a review of the OPA's consideration of
environmental costs and intragenerational and
intragenerational equity.
Sorry, are you there, Mr. Shalaby?
My question here is just one by way of evidence.
MR. SHALABY: Yes.
MS. DOVER: Of the material that the OPA has filed with
the Board, what of that material contains information about
environmental costs?
MR. SHALABY: Our approach has been to quantify
emissions, land use, water use, the six indicators that we
talked about, but not to translate that into dollar signs.
MS. DOVER: No. So, again, being totally obtuse, to
clearly distinguish what the Board is to look at, the OPA's
consideration of environmental costs is contained in the
environmental indicator analysis under environmental
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protection planning criteria. Is that correct? No?
MR. SHALABY: Well, if cost is a dollar sign, then it's
not that.
MS. DOVER: Okay. Well, then help me out here, Mr.
Shalaby, because the OPA's interested in the consideration
of environmental cost, so -- whether or not you consider it
an environmental cost.
So help us out here, what do you consider an
environmental cost?
MR. SHALABY: We define environmental emissions and we
say that these emissions are precursors to impacts. Air
emissions are precursors to smog or to acid rain or to CO2
that -- greenhouse impacts and so on.
So the emissions have impacts. We did not go to the
impacts, because that is project-specific and that will be
determined in the project stage. That's the reason we did
not go to specific impacts of the emissions. So we stopped
at describing the emissions under different scenarios, the
different kinds of emissions over time under different
scenarios.
Those translate to impacts, and the impacts result in
costs to either property or people or the ecosystem.
MS. DOVER: I am just going to lob you a question,
because the Board has signalled that the review could
include the OPA's consideration of environmental costs. Did
you consider environmental costs?
MR. SHALABY: Not in dollar signs, and we gave the
reasons why we didn't do that.
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MS. DOVER: Okay.
MR. SHALABY: We gave the ingredients, the basic
quantities that we can be certain of describing. We
described methodologies to go further, but did not do that,
and we indicate that when it is projects specific, it is
more meaningful to do that on a project-specific basis.
MS. DOVER: So you have indicated -- let's presume, for
the sake of argument, that whatever it is that you
considered in the context of indicators - and by "whatever",
I mean however it is that you categorize that - that
environmental indicator process I would like to look into
further, because you were asked some questions by counsel
for VECC on this on September 11th. This is volume 4 at
page 155.
Because if I am understanding you correctly, Mr.
Shalaby, you don't want to be put in a box of having said
that environmental costs should be quantified monetary
comparisons. So the OPA didn't do that, but there is
something in the environmental indicator process that the
OPA did do.
So I think we need to spend some time with that to
figure out what you considered, both in terms of costs, but
then also because the indicator -- if I understand
correctly, the indicators are one of two components of the
environmental protection criteria, so at line 27, where you
were asked about what material changes were made to the plan
as a result of the application of environmental performance
and societal acceptance. And your response, which I am
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reading into the record -- and I am really going back to
this, Mr. Shalaby, so you can provide us with greater
clarity, because you signalled here:
"We are in a narrow band, narrow corridor, where
weighing and trading off will not be material
different in what we choose. So for that
reason..."
And here is the significant part:
"...we chose just to present the information and
not to go through a lot of trading off and a lot
of weighing at this stage."
So did you just collect the information, or was it in
any way considered, metabolized, integrated? Was it an
information-gathering process, or did something happen to
the information?
MR. SHALABY: It was both a -- it's not just a
gathering process, as we described. It was information --
emission rates is an information-gathering process. We
combined that with the energy output of the plan and we
produced the emission tracking that we do. So it is not
just information gathering.
There is an added element of taking these emission
factors, together with the generation amounts in each year
of the plan, to generate the six indicator quantities.
So that's what we have done. We collected information,
applied it to the performance of the plan to generate, to
track the six indicators.
MS. DOVER: Okay. Then I would like to take you --
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MR. SHALABY: And we go further into describing that
environmental regulations on the environmental protection
side is going to be enforced and overseen by a large number
of entities. We mention some of them in the evidence, and
there are many more than that.
We also say that project approvals will go through
specific environmental assessments that will talk about
specific project impacts.
So we say a different thing. We say several things.
One is we provide information that is relevant and helpful
and useful to be considered at the plan level. We say we
know that each project will be considered separately in
further detail when its location, when its technology, when
its method of construction, when its methods of operation
are more well defined and specific. That is a more
appropriate stage to consider the impacts further.
And we say there is a significant body of governance,
both in laws and in administrative law, to oversee the
environmental protection and safety considerations
associated with these facilities.
MS. DOVER: I understand that, Mr. Shalaby, and you
have given the same explanation to previous cross-examiners,
but I just want to --
MR. SHALABY: That is not simply collecting
information. That is a lot more than that.
MS. DOVER: I just want to be clear here, because you
told counsel for the VECC, and it is in the transcript here,
that you did not weigh the information.
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MR. SHALABY: Yes. We did not.
MS. DOVER: Okay.
MR. SHALABY: We did that in the previous stage of
planning. The context for the quote that you just put on
the record is whether an acre of land is worth twice or
three times 2 tonnes of water or 17,000 gallons of water, or
not, or whether radioactivity is more harmful than CO2 or
SO2. We did that in the supply mix evaluation, because we
were looking at vastly different scenarios, vastly different
mixes.
The reference to a narrow corridor here is that we are
developing a plan that will respond and result in a narrow
range of the tract emissions that we are talking about. For
that reason, the trading off and the weighing was not going
to result in meaningful differences. That's the context
we're talking about, not adding weights or trading off at
that stage.
MS. DOVER: And I guess the thing is -- and I ask this
question completely openheartedly, because the issue is if
the environmental indicators speak to the issue of
environmental costs, which is what this Board wants to hear,
we need to know how those environmental indicators were
weighed.
And I understand, Mr. Shalaby, you have been generous
at explaining that the ultimate assessment that came out of
those medium-based analyses did not result in any kind of
comparison between the plans, but what we need to know, in
order to determine whether or not you considered
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environmental costs, was how you weighed the information as
a result of -- that came out of the environmental indicator
process, because, as I understand it, that's what you are
suggesting to the Board is your environmental cost analysis
is what you did with the indicators.
So I am inviting you to share with the Board how you
weighed that information.
MR. VEGH: Madam Chair, I think my friend is becoming
argumentative, not in an adversarial way, but -- with a good
tone and a good intention, but I think the question has been
asked and answered, and we have now hit the stage of a bit
of a debate, and I am not sure if there is that much value
in repeating the question and answer.
MS. NOWINA: Mr. Vegh, I am interested in Mr. Shalaby
giving it one more try, based on that last question, and
then we will leave it at that, Ms. Dover.
MR. SHALABY: My turn?
MS. NOWINA: Your turn.
MR. SHALABY: The way of evaluating and weighing is
that we looked at the environmental results, the six tracked
emissions that are displayed from year to year to year over
the planning period.
We observed several things. One is many of them are
declining over time, and we said this is good, CO2 NOx, SO2.
Mercury is being eliminated completely. That is a good
result. So that is evaluation. We indicated that
contaminants that reduce over time is a good thing.
Contaminants that do not increase over time is not a
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good thing nor a bad thing. They stay roughly stable. And
that's water use and radiation and nuclear fuel quantities.
We observed that land use is going up because of
renewables and because of transmission, and that is an
observation. The plan uses more land over the years, and it
is a feature of using renewables and using transmission to
harvest these renewables. So we did more than just display
the parameters.
We took into consideration that these amounts are well
within regulatory limits. For example, the radiation dose
is a small percentage of the allowable dose by regulation,
as an example.
The CO2 emissions are well within government targets
for reduction of CO2 emissions the Ontario government
targets, so some are federal limits, some are Ontario policy
targets.
We observed that the plan will result in meeting
targets and are well within regulatory and health targets
specified by authorities.
MS. DOVER: Well, Mr. Shalaby, I have some questions in
regards to the issue around environmental compliance which I
will reserve for -- yes, I had anticipated the nudge, and I
really just have two more questions. It was the metaphors
that took all of the time. It is incumbent upon me to at
least ask you a question in regards to waste. I am going to
ask for slide 111 be put up from K1.1. This really builds
upon the answer you have just given in regard to the
increased environmental burdens that will be caused by
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renewables in comparison to the environmentally benign
aspects of nuclear generation.
So this is -- I am asking you specifically -- my
question is going to be to ask you to explain the lateral
arrow under "follow nuclear production." And as you do
that, I want you to do that in relation to a specific
imaginary question.
Fifty years down the road, Mr. Shalaby, imagine, if you
will, a wind farm that we have established and is
operational today and what that land looks like 50 years
down the road. And then to imagine what a nuclear facility
looks like 50 years down the road, and what that land looks
like.
And in light of that contrast, why is it that there is
an increased environmental burden associated with renewables
and a neutral environmental burden associated with nuclear
power?
MR. SHALABY: The arrows are simply indicating the
quantitative nature over time.
We spent time discussing that we did not talk about
burden. Impacts are separate from the indicators that we're
tracking. I am just simply saying there is more acreage,
that this plan will result in using more acreage and will
result in the same amount of sievert year dose over time,
tracking the nuclear generation roughly.
There is no burden implied or explicit in any of this.
It just is simply a description. The detailed year-by-year
evidence is in G-3-1. The specified quantities are
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determined under different scenarios and under different
years. So the details are numerous and they are behind
this, if we chose one slide to describe the environmental
factors and how they track over time, this is a simplified
way of doing that or a summary way of doing that.
MS. DOVER: Okay. Then I will return with some other
questions in regards to the environmental panel.
I guess I will just sort of close in regards to a
couple of quick questions in regards to societal acceptance.
And in closing I am going to refer, once again, to the
cross-examination by VECC which was very helpful in terms of
laying out some foundational concerns.
At page 56, line 4 -- 24, I apologize. This was a
question from counsel asking for greater elucidation in the
meaning of the societal acceptance criterion and the answer
enumerated a number of presumably components of societal
acceptance, but included projects, implementation,
governance in Ontario, environmental protection. So it
seemed to me that it was really broad, encompassing list of
every possible governance process associated with social
acceptance.
I guess at this point I am just going to ask you a very
targeted question which is: How socially acceptable will it
be to future generations to have the legacy of nuclear
power? How is nuclear power considered in the context of
intergenerational equity as a demonstration -- I am not
asking you in terms of the outcome here -- but as a
demonstration of how sustainability was considered in the
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criterion of social acceptance or societal acceptance?
MR. SHALABY: You talked about intergeneration effects
of nuclear power?
MS. DOVER: Yes. I am not asking what are the
intergenerational effects. I am asking: How was it
considered in the context of societal acceptance, especially
given that the explanation of societal acceptance, the
components of societal acceptance, are all governance
processes?
MR. SHALABY: I will try to answer directionally, and
if I am not addressing your question, you will let me know.
We spoke about the intergenerational impacts of nuclear
being the used fuel and the decommissioning. Those are the
things that are going to last for many, many years.
We observed and we reported on the cost of these
activities being collected by today's generation. We are
not leaving the cost of nuclear waste management or
decommissioning to future generations. These are being
collected by current generations, current users of
electricity.
That's one way of assuring the equity that we are not
leaving a legacy to be looked after by future generations.
We are collecting the money to do that today. That's one
example.
The other example is, the costs of nuclear power is,
when we considered the costs and techniques, it gives
similar weight or sufficient weight to future costs and to
current costs. We are not shifting costs. We are not
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considering future costs to be heavily discounted. We
didn't heavily discount future costs. The social discount
rate and the levellizing techniques, both of those together
give sufficient weight than other techniques, more weight to
future costs than other techniques in costs. That's another
indication, one other way we dealt with nuclear specifically
as an option.
The third, of course, is nuclear is replacing something
else that could be emitting CO2. CO2 is a legacy that is
left for many, many years and is unmitigated, in terms of
costs to compensation for it or technology to compensate for
it.
So here are three observations about nuclear and
intergenerations.
MS. DOVER: I have one last question, which is really a
concern that I will leave with you and invite you to take
the last word.
So Ms. Lea asked you, on the first question, or on the
first day, how is it that a plan, that has significant --
the lion's share portion of it being nuclear generation, how
is that flexible?
You were, to your credit, candid with her where you
said: It's not flexible, but it has other benefits.
So when we talk about nuclear waste, in this context on
this panel, I think we need to take pause, because the
analysis around nuclear waste, while obviously we disagree
with it on other substantive grounds -- represents the
combination of key processes.
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Your analysis around nuclear waste is a result of your
analysis on the environmental indicators that has --
MS. NOWINA: Ms. Dover, you will get a chance to give
argument later.
MS. DOVER: Yes.
MS. NOWINA: If you have a question?
MS. DOVER: I do, I do. I will make it more concise.
My concern is that you have just indicated that nuclear
waste will endure over time. So I mean to suggest that I
have concerns around the result of the environmental
indicator analysis, around waste. It suggests a faulty
process around waste and the last thing -- that's my first
-- asking you to comment that: Are the results around
nuclear waste suggestive of a faulty process of the
indicator analysis? But more broadly than that, were where
you told Ms. Lea that nuclear power is not flexible, somehow
the sustainability analysis around nuclear waste did not
result in the same candour. That says that there is no
intergenerational equity around nuclear waste. It instead
resulted in a neutral treatment of that. So I am going to
ask you to reflect on how nuclear waste suggests defects in
the indicator analysis and, more broadly, on your
sustainability methodology.
MR. SHALABY: This is the last question?
MS. DOVER: I swear. I'm done. I don't even have a
remaining metaphor.
MS. NOWINA: It's the last question.
[Laughter]
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MR. SHALABY: A number of things to do with nuclear
waste. It is not just indicators we are giving. It is
observation that the money is being collected. It is
indication that there is something called the Nuclear Waste
Management Organization that has been in place for several
years that is developing waste management options and
proposals. The first stage of approval has been granted by
the federal government.
This is progress. There is action. There is progress.
There is money in the bank to look after nuclear waste. So
it is not just indicating that there is nuclear waste.
We are quantifying the nuclear waste quantities. We
are adding the information about the management of that
waste, the money needed to manage that waste. We are not
denying there is an impact in the future. These things
would last for many, many years. There is no denial of
that.
But when the money is available for it, and the concept
is developed to manage it, and there is an organization in
place to look after it, that gave us an indication that this
issue is being managed and is being managed responsibly.
That's in addition to just indications.
And you made observations about the flexibility of
nuclear. We talked about it at length over the last several
days, as well, and nothing more to add in that regard.
So, thank you.
MS. DOVER: Thank you.
MS. NOWINA: Thank you, Ms. Dover. Mr. Murphy for
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CanSIA.
CROSS-EXAMINATION BY MR. MURPHY:
MR. MURPHY: Hello. Hello, Mr. Shalaby. How are you?
I am behind -- Mr. Vegh is protecting you there, although
from what I have seen so far, you don't need too much
protection.
Can you see me and hear me all right?
MR. SHALABY: I can. If you speak into the microphone,
that will be even better.
MR. MURPHY: Anybody else? Everybody all right?
MS. NOWINA: No, Mr. Murphy, you can't be heard. Maybe
just speak a little bit more into the microphone.
MR. MURPHY: If I lean forward, is that any better?
MS. NOWINA: Is that better?
MR. MURPHY: I will do that, then.
MS. NOWINA: Still getting -- is your microphone on
now?
MR. MURPHY: The green light is on.
MS. NOWINA: All right.
MR. MURPHY: Should I move somewhere else?
MS. NOWINA: The mic is working. People at the back
can't hear you.
MR. MURPHY: I am not sure what to do about that.
MS. NOWINA: Would it be difficult for you to move
somewhere else?
MR. MURPHY: I can do that, yes.
MS. NOWINA: Maybe you could switch spots with Ms.
Dover. We could hear her.
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MR. MURPHY: Is this one any better?
MS. NOWINA: Yes, that one is better.
MR. MURPHY: All right. There we go.
Can you still see me, Mr. Shalaby?
MR. SHALABY: I can.
MR. MURPHY: I wanted to ask some questions -- some of
this was covered before, but I am obviously going to ask it
from the perspective of solar industry, which is my client,
and solar power.
I want to start, if I can, with page 6 of your
presentation, which is the Exhibit K1.1. We have covered
that a little bit already, but I just wanted to make sure I
understood.
So as I look at that, what you have told -- sorry, I
don't mean to -- are you okay?
MR. SHALABY: Go ahead.
MR. MURPHY: So as I look at that, what I think you
have told other cross-examiners is that the plan that you
are seeking approval of through this process really relates
to what, in this second updated chart, is that planned
component, and that the committed and existing are -- well,
as described, committed and existing. So that your
discretion and methodology that you are seeking approval of
really relates to that planned component.
MR. SHALABY: We said a lot of things about that, yes.
MR. MURPHY: "Yes" is ultimately the answer.
MR. SHALABY: Yes, for the last few minutes, not to add
redundancy and, worse still, not to contradict anything I
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have said before.
MR. MURPHY: You have been taught well in witness
school, Mr. Shalaby, I have to say.
I want to turn, if I can, then, to page 54 and -5 of
that same slide. And I guess -- this is related to
renewable resources and the approach.
What this does here is identify your approach to
renewable portfolio, and your first step was to establish
the potential. Then on page 55, you identify the potential
for renewable resources and, in particular, of concern to my
client is solar, and you identified 488 as the potential.
And that's, as I understand it, the potential through
to the end of the plan; is that correct?
MR. SHALABY: That's correct.
MR. MURPHY: Further, as I understand, that is -- all
of that potential comes from the renewable energy standard
offer program?
MR. SHALABY: For solar it is, yes.
MR. MURPHY: For solar, yes, correct. So for the
purposes -- and I think this is reflected on page 61 --
MR. SHALABY: You will note the asterisk about solar
being part of conservation, as well, when it is on customer
facilities.
MR. MURPHY: Agreed, and we will come to that.
MR. SHALABY: In addition to that, there is solar in
the conservation potential.
MR. MURPHY: Absolutely. And this is renewable supply.
MR. SHALABY: Right.
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MR. MURPHY: Then we will see on page 61 that you are
treating, for the purposes of the plan, that that 488 is
committed?
MR. SHALABY: Yes.
MR. MURPHY: So that in respect, if we go -- you know,
that box we saw on page 6, the planned component, the
incremental solar element of supply is zero?
MR. SHALABY: Yes.
MR. MURPHY: And I am wondering -- maybe I will ask:
Why is it zero?
MR. SHALABY: The information we have on cost and cost
projections vary. Your own evidence provides information on
costs, and I can take you to it, but it is primarily because
we think the costs will be high.
MR. MURPHY: All right. So if I go to the --
MR. SHALABY: And we follow all of that with it is
uncertain. Mr. Shepherd took me through a discussion on
technology evolution and cost reductions and others, as
well. We acknowledge that could happen.
We are not in a position today to rely on cost
reduction estimates that will bring solar to be comparable
to other supply sources for the energy it provides. When
that occurs, it is coming in the plan. But at this stage,
the information we have and the judgment we make - and it is
a judgment - is that the costs will be high. That judgment
could be wrong, and it will be modified if it is wrong.
MR. MURPHY: But so that I understand it correctly, the
plan you are seeking approval of has a methodology that
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would permit you to have zero incremental solar-sourced
supply in 2027?
MR. SHALABY: At this stage, subject to all of the
things we talked about. The plan will be reviewed.
Relative economics of options will be assessed again.
Sorting out of options will be done again when we come back
again.
MR. PIETREWICZ: And I would like to add to that, just
to make sure we're talking about the same thing, what Mr.
Shalaby is referring to is the planned component as
illustrated by that bright green bar on the top of that bar
chart.
However, there is the substantial committed component,
and within that committed component there is the nearly 500
megawatts of solar, and we have indicated in our evidence
and certainly in response to a number of CanSIA
interrogatories - for example, the OPA's response to CanSIA
interrogatory 25 - that while we recognize that solar
technology and associated economics will continue to improve
and that additional solar resources will arise over the
period of the plan, we add, however, that this additional
growth in solar resources is expected to result from the
renewable energy standard offer program.
And in other interrogatories, we point out that within
the conservation programs themselves, there's the potential
for additional solar uptake.
So I want to make sure that we're not sort of
presenting a false impression of the role of solar in the
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future within the IPSP. I just want to point out that at
present we see solar emerging from things such as the
renewable energy standard offer program and conservation
initiatives, which at present are this committed portion of
the plan, as opposed to through initiatives that we at this
point are having some discretion over and which we are
evaluating on a cost and other basis.
MR. MURPHY: No, and I appreciate. Far be it for me to
have, you know, on behalf -- we're happy to have you say
good things about solar and to have more. So that is all to
the good. But I just did want to focus on the planned part,
and I agree that I think we just went through, that that
RESOP program commits that -- is a part of the committed 488
that you are counting in your numbers.
But I guess what I am getting at is that, for the
planned part, you are asking for approval of your
methodology, and then a couple of specific procurements
unrelated to renewables.
MR. SHALABY: Yes.
MR. MURPHY: And so that once the Board says, yes, if
they do, we approve your methodology, in theory we could end
up in 2027 with no more solar than the 488 committed?
MR. SHALABY: No. The 488 that we put on the table is
not a constraint. It's not a limit. It is an assessment of
what's in the pipe today.
We think that not all of that will materialize. Some
of it will materialize. Some will not. And whatever does
not is subject for future contracts, perhaps.
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So we think the 500 megawatts or so that is in the pipe
today is indicative of an estimate for some time to come
until we come and renew our assessment and as technology
develops and experience in Ontario develops.
We will be a lot better off three years from now with
some solar power developed in Ontario, operating. I
indicated, I don't know whether it was this morning or
yesterday, there are facilities elsewhere in Arizona, for
example, that are being reported on regularly. People have
harder data and factual data to rely on elsewhere.
We will have that data in a year or two or three and we
will be in a much better position to estimate the
contribution and the economics of solar.
MR. MURPHY: So if I can, from the planning criteria
perspective, those six planning criteria, if I understood
your earlier answer correctly, your primary concern in solar
is the cost of criteria?
MR. SHALABY: Yes.
MR. MURPHY: Is there any other concern around any of
the others? Or it is just cost?
MR. SHALABY: Well, we describe the land use associated
with solar.
MR. MURPHY: Right.
MR. SHALABY: That's a description. Whether it becomes
a concern after a certain penetration of solar is subject to
assessment and monitoring. But it is primarily the cost at
this stage.
One of the features that is very attractive about solar
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is that it reduces power at times of system peak. The
correlation between the power produced with solar and system
peak is high. That gives it power -- the value of that
energy is much more valuable, it is higher then. So even if
it is more expensive, it has high value at that time.
MR. MURPHY: On the land use point, I understood,
though, that that was an environmental indicator and you
didn't use those to distinguish between any of the --
MR. SHALABY: Just a description.
MR. MURPHY: Right. Then would like to ask you a
question about the supply mix directive related to this, if
I can, and I am sure you have it memorized but you can
probably get it out, if you want.
Specifically, I was looking in point 2 of the supply
mix directive. It says:
"The government directs the OPA to create an
integrated power system plan to meet the following
goals:...
(2) Increase Ontario's use of renewable energy
such as hydroelectric, wind, solar, and biomass
for electricity generation."
MR. SHALABY: Yes.
MR. MURPHY: So my question relates to, from the
planned point of view, what -- from the, you know that plan,
that green box we were talking about – what, in the planned
point of view, addresses that goal in respect of solar?
MR. SHALABY: The consideration of solar installations,
as part of residential and commercial buildings is the part
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in the planned segment of the document that relates to
solar.
It is customer-based generation and smaller size
installations that will be prevalent in future years.
MR. MURPHY: But that is in the conservation category?
MR. SHALABY: That is right.
MR. MURPHY: So I think this is -- the number 2 is
directed -- I'm sorry, I don't mean to trap you. If you
want to take a look at it. Number 2 appears to be directed
more to the supply side of the equation than conservation
side of the equation.
So I am just wondering again, what is it in your plan
that addresses that number 2?
MR. SHALABY: Well, as I indicated, the consideration
of nearly 500 megawatts that's contracted for under the
standard offer is an indication of use for solar power into
the future. Some of that will materialize now. Some will
materialize later.
MR. MURPHY: So as I understand it, what you are
saying, then, is what we point to to say that we have
satisfied what the government's asking us to do in number 2
is the renewable energy standard offer program?
MR. SHALABY: Yes.
MR. MURPHY: And nothing else?
MR. SHALABY: Nothing else at this stage, yes.
MR. MURPHY: Okay. Then I would just -- on a related
point, you have referred I think to how you will be able to
update the plan with new information as it arises. And the
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one question I have on that is, the challenge that that
creates, of course, is as time progresses, the scope of room
for your discretion, for your planning discretion decreases.
MR. SHALABY: Yes.
MR. MURPHY: As we saw in the last year, about 12,000
megawatts approximately of room decreased?
MR. SHALABY: Yes.
MR. MURPHY: And so how have you -- when you look at
solar and the potential for it to develop and prices to come
down, how do you plan on dealing with having some solar
electricity generation when, as time progresses, your room
to accommodate it in the plan disappears?
MR. SHALABY: We indicated in discussions over the last
several days that the energy produced by solar power can, in
fact, be accommodated in the plan as displacing natural gas-
fired generation or other generation on peak.
So it can, indeed, be accommodated at a minimum to
displace energy and, further, to displace capacity that
would be needed in the future, as well.
But if you built your capacity and there is no more
room for capacity, then it will displace energy and I think
that is what your concern was.
MR. MURPHY: Yes.
MR. SHALABY: If you built up all of the capacity, how
would you accommodate it? You accommodate it by backing the
generation coming out of that capacity.
MR. MURPHY: Now, you raised conservation and I think
we agree that, definitionally, small-scale customer-based
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generation, including solar, is another area where you've
talked about the solar potential.
MR. SHALABY: Yes.
MR. MURPHY: As I understand it, you have identified
about 148 total megawatts for -- I think this is at page 46.
MR. SHALABY: There are numbers in the evidence and I
would refer to the conservation resources panel for details
on that. If you're going to get into details, then the
conservation panel is better able to deal with that.
MR. MURPHY: That's fine. I appreciate that. I guess
all I was really trying to find out -- and maybe this is
better for that panel, if so I will reserve it -- was
whether -- because as I understand it, of that 148 to 2010,
two megawatts was solar. I was wondering whether you were
expecting any of that to be anything other than RESOP-based?
MR. SHALABY: The mechanism of procuring it, you mean?
MR. MURPHY: Yes.
MR. SHALABY: Let them address that.
MR. MURPHY: Okay.
MR. PIETREWICZ: In the meantime, in case it helps,
OPA's response to CanSIA interrogatory 1 identifies at least
four sources of potential solar.
MR. MURPHY: Yes. So to follow-up on that, if we go to
the IPSP regulation, 424/04.
Just looking at 2(1)(2). Do you have it there, Mr.
Shalaby? Have you had a chance to look at that?
MR. SHALABY: Yes, I have it.
MR. MURPHY: It talks about the plan identifying and
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developing innovative strategies to accelerate the
implementation of conservation, energy efficiency and demand
management measures.
So we agree that small-scale generation is one of those
conservation measures?
MR. SHALABY: Yes.
MR. MURPHY: And is it -- so I am just trying to
understand kind of what you are saying vis-à-vis solar. In
particular, what satisfies the request or direction, or
whatever you would like to call it, to have an innovative
strategy for accelerating conservation?
Is it RESOP on the small scale?
MR. SHALABY: RESOP is the main program and it is very
innovative, and it is broad in the sense that it encourages
innovation in multiple ways and it is not prescriptive.
So RESOP is a program that is suited for solar power,
as evidenced by the large number of megawatts that have been
contracted.
MR. MURPHY: Well, we have agreed that's part of what's
committed under the plan.
MR. SHALABY: Yes.
MR. MURPHY: Is there anything in addition, from a plan
perspective, that addresses that point?
MR. SHALABY: There is, and that's the updates, the
flexibility, the indication that we made over and over that
we will reassess, and, with experience under our belt, we
will come here three years from now and see what the
technology developments have been, what the prospects for
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future technology development will be and make adjustments
to the plan and additions to the plan.
MR. MURPHY: So there is no strategy now. You say
there might be a strategy in the future?
MR. SHALABY: Well, that is a strategy of sorts.
MR. PIETREWICZ: If I could add, we currently have a
number of renewable procurements under way, or at least
directed to us, including, for example, this RES III
procurement, which is for up to 2,000 megawatts of renewable
power.
MR. MURPHY: Those are over 10 megawatts.
MR. PIETREWICZ: Over 10 megawatts.
MR. MURPHY: That is not conservation.
MR. PIETREWICZ: No. I am talking about the supply
procurement. Unless I am mistaken, my understanding is that
solar resources are not precluded from participating in this
kind of procurement.
While the procurement itself establishes an envelope
that we are calling "committed" in our evidence, the
specific composition of that 2,000 megawatts is subject to
the outcomes of the procurement process, and that would be a
competitive process.
MR. MURPHY: But that's a government-directed
procurement?
MR. PIETREWICZ: Yes. The RES III is a government-
directed procurement.
MR. MURPHY: So outside the scope of the planning
discretion, methodologies you are asking for approval from
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the Board?
MR. SHALABY: In the conservation family of programs,
there is metering provisions. There are a combination of
initiatives within similar programs. The conservation panel
can address that more fully.
So the conservation programs, together with the
renewable energy standard offer, together with the update
provisions in the planning, constitute the strategies for
accommodating and including nuclear -- solar as we go
further.
MR. MURPHY: Nuclear solar, now there is an idea. All
right. Well, I will follow up with the conservation panel,
but I appreciate your help. Thank you.
I just wanted to just understand a little bit -- and
this kind of follows up on some questions from before. This
relates to the treatment of -- we still keep out 424/04, the
regulation, if you have it, because it really arises out of
that, particularly in 2(1)(7). That talks about safety,
environmental protection, environmental sustainability are
considered in developing the plan.
You have answered lots of questions on that, but as I
understand what you have said is that the net result -- that
for safety and environmental protection, in essence you said
because there are government process rules out there to
protect it with respect to safety and environmental
protection, there was no -- you did not distinguish among
the various sources of electricity on either of those
grounds?
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MR. SHALABY: That's correct.
MR. MURPHY: Then environmental sustainability, you
have gone through a long discussion. I don't want to recap
it, but that -- the environmental part of that became one of
the six planning criteria called environmental protection.
You said, with respect to that, that it didn't result
in you distinguishing among any source of electricity
either?
MR. SHALABY: We called it environmental performance.
MR. MURPHY: Yes.
MR. SHALABY: We described the environmental
performance by tracking the six indicators, but did not
differentiate in choices within the narrow corridor that
we're working with at this stage, yes.
MR. MURPHY: So where we're left with, at the end of --
looking at how you interpreted number 7, is that, basically,
if the Board approves your plan and your methodology, there
is nothing limiting -- there's nothing that affects your
discretion to pick any source of electricity related to
those three criteria outlined in 7?
MR. SHALABY: If they're complying with all
environmental protection regulations, if they comply with
all of the safety regulations, if they implement it in ways
that satisfy societal requirements in terms of process,
impacts, assessments, they meet our requirements in those
dimensions, yes.
MR. MURPHY: Well, I am talking more about your
discretion to pick one source of electricity or another.
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You are free to pick any, because of -- because you are
telling the Board that basically none of the criteria in 7
gave you any reason to pick among them.
MR. SHALABY: Well, if what is picked does not satisfy
the requirements -- for example, if we pick a generating
technology or fuel that results in air emissions that are
outside of government's intended policy on air emissions,
then that is -- does not satisfy the requirements.
What we chose for this plan and what we put in the plan
meets all of the requirements. For that reason, it didn't
differentiate between the options going in.
But we could conceive of options that do not meet the
requirements, and we indicated we didn't want to clutter the
evidence any further by putting things that don't work and
demonstrate that they don't work.
So we did not put residual oil, as an example, as an
option. We know if you put residual oil, it will result in
costs and emissions that are less favourable than other
options. So we picked the best in each family of options
and proceeded with that.
MR. MURPHY: So is it possible that someone sitting in
2025 or '27, looking back, would argue that more aggressive
safety standards today or more aggressive environmental
protection standards today would have made sense, would have
generated more intragenerational equity?
MR. SHALABY: You are indicating that future
requirements would be different than current requirements?
MR. MURPHY: No. I am indicating if somebody --
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thinking about intragenerational equity, right, the notion
that we need to think today about its impact on the person
tomorrow and 20 years from now at the end of the planned
period, what I am saying is it feasible that
intragenerational equity would include looking back from
that date in the future at the end of the plan and saying,
You know what, we should have had more aggressive safety
standards or more aggressive environmental protection
standards when we started the plan.
Is that a possible conclusion that is reasonable in
considering intragenerational equity?
MR. SHALABY: I will unbundle the question. Your
question is whether 20 years from now people will say, If we
had to do this over again, we would have gone with different
environmental standards or environmental protection
standards?
MR. MURPHY: Or safety, higher ones.
MR. SHALABY: Higher safety standards or higher...
Safety standards and environmental protection standards
respond to societal expectations and values, and as those
develop, those will develop, as well.
MR. MURPHY: As you were considering environmental
sustainability in the content -- in the context of the plan,
and you refer, in your evidence, to intergenerational
equity, did you consider the possibility that pressures
would increase safety standards and environmental standards
over the course of the plan?
MR. SHALABY: We know generally that has been the trend
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over the years. In that sense, environmental protection
standards and safety standards develop in time to be higher
standards, if that's your description, yes.
MR. MURPHY: Well, that's not quite what I asked. I
asked if the OPA considered, as it was developing the plan,
whether that was possible, that what you just described as
history.
MR. SHALABY: It is possible.
MR. MURPHY: Agreed. We agree on that. But I am
asking if -- based on the fact that it is possible, did you
consider it and its impact on the plan as you were
developing the plan?
MR. SHALABY: We considered it in the following way in
that the project proponents would have to meet future
regulations. The way we considered environmental protection
and safety is that project proponents will have to go
through measures that meet safety and environmental
protection standards. As those standards develop, project
proponents will meet those as well. So we did consider it,
that project proponents will meet different standards as
they evolve over time.
MR. MURPHY: Maybe I am confused and I apologize, but I
am actually talking about your plan. Not projects.
MS. NOWINA: Mr. Murphy --
MR. SHALABY: I don't believe anybody who tells me...
MR. MURPHY: I was enjoying the discussion so I leaned
away from the mike, I apologize.
I was talking more -- I was talking not about projects
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but talking about your plan and asking, as you look at your
plan -- because these, these factors in 7 apply to your
plan.
MR. SHALABY: Yes.
MR. MURPHY: So what I am asking about is, I mean it is
not -- I guess I am asking -- you are asked to consider
these factors.
MR. SHALABY: Yes.
MR. MURPHY: What I am asking is, would it not have
been reasonable to consider that you would have had, 20
years from now, quite a bit more aggressive environmentally
sustainable, environmentally protective and safety
standards, and that you ought to have developed a plan that
anticipated that? And you ought to have considered that at
the very least, from a plan perspective.
MR. SHALABY: In what way specifically?
MR. MURPHY: Any way.
MR. SHALABY: So for example, environmental protection
has to do with discharges of waste or water or heat,
containment, training processes, emergency response
processes. These continue to develop and evolve.
To pinpoint specifically how that will evolve over time
is difficult to chart at this stage, other than to
qualitative expect future proponents to meet future
regulations and future environmental protection standards.
MR. MURPHY: Sorry, just so I understand. So do I take
it from that, does that mean you didn't consider it?
MR. SHALABY: We considered that proponents will meet
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environmental protection and safety standards however they
develop.
MR. MURPHY: Okay.
MR. SHALABY: I don't know how much more we can say
about that.
MR. MURPHY: I think I understand, so I will move on.
The last point, my last set of questions, I just was -- sort
of a variation on that. And I think we have talked about
solar and identified cost as being a primary concern.
I am wondering, we've filed some evidence as you
referred to before, but in developing the plan, did you look
at other jurisdictions like Germany and the solar plan that
it has and – well, let me ask that question. Did you look
at Germany and assess it and what it did around renewables
and solar as you were developing the plan?
MR. SHALABY: We are aware of developments in other
jurisdictions, some more than others. But the detailed
evaluation we did not get into. Time did not permit a
detailed evaluation of progress elsewhere. Now, your
evidence provides a huge amount of information on Germany,
in particular.
MR. MURPHY: Absolutely. And I guess what I'm asking
is the evidence we provided and the plan assessment, I am
asking actually whether you had done that before you brought
your plan forward for approval and the answer is no.
MR. SHALABY: Not to the same level of detail that you
provided.
MR. MURPHY: Right. Did you at any point model or
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consider a plan that said: Let's have a plan that has us
lead the world in conservation, lead the world in renewable,
and let's model that and see what that looks like?
MR. SHALABY: We considered the directives that we
received to be our -- the definition of goals for this plan.
So the targets that are set by the ministerial directive are
what we considered in developing the plan.
MR. MURPHY: So that when it came to that notion of
leading the world in conservation and leading the world in
renewables, you viewed the directive as limiting your
discretion to consider that?
MR. SHALABY: We didn't consider it limiting. I am
just reluctant to accept "leading the world." What does
that mean? I mean, we -- we think our program on
conservation and our targets on conservation are very
ambitious. It takes us into much more efficient economy,
much more efficient use of electricity. The same amount of
electricity for 15 million people as being used by 12
million people today, larger economy.
That is a step in the right direction. Now, whether it
is leading the world, that's a piece that I am just thinking
that, determining that there is no Olympics for
conservation. I don't know how you determine even that.
MR. MURPHY: Okay.
MR. SHALABY: There's anecdotal evidence about
different jurisdictions. We looked at California very
carefully in conservation. We knew their track record. We
knew the standards they're using. We understand the
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approach they're using.
Different jurisdictions have different emphasis at
different times and different technologies so ...
MR. MURPHY: Just a second. Thank you very much, Mr.
Shalaby, I appreciate your time.
Thank you, Panel.
MR. SHALABY: Thanks.
MS. NOWINA: Thank you, Mr. Murphy. I would like to
get a check on who else might be cross-examining this panel
and decide what we are going to do regarding time. My list
has APPrO, Mr. Brett, but I don't have a time estimate.
MS. LEA: I don't believe Mr. Brett is here. I haven't
seen him for a couple of days so I don't anticipate he has
any questions.
MS. NOWINA: Have we heard from Mr. Keizer?
MS. LEA: Yes, indeed. Mr. Keizer does not have any
questions either, and apparently there was some mix-up about
that, so that was a misunderstanding, miscommunication.
MS. NOWINA: All right. Mr. Cowan? Still about ten
minutes, Mr. Cowan?
Mr. Cowan I mentioned 15 but I've refined my effort and
it should be five minutes for me...
MS. NOWINA: All right. Before you start, Mr. Cowan,
the Board panel has some questions, probably won't be more
than ten minutes.
Mr. Vegh, redirect; do you have a sense?
MR. VEGH: Less than five minutes.
MS. NOWINA: Less than five minutes. So, if court
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reporter is okay with that I think we should proceed and
finish with this panel before lunchtime.
I see some gratitude from the witness panel for doing
that.
So, Mr. Cowan, why don't you go ahead.
MR. COWAN: There we are on. Am I audible?
MS. NOWINA: You are.
CROSS-EXAMINATION BY MR. COWAN:
MR. COWAN: The Irish say: It a good thing when mike
works. Sorry about that. Good morning, and thank you to
the Board, the Board Staff, Mr. Shalaby and Mr. Pietrewicz.
I will try to keep my questions, as I said, to less than
five minutes.
These questions relate to a planning method and
approach. They work from the premises of the new three Rs
and one of the old ones. So I ask about reduce, reuse and
recycle, and arithmetic.
We will start with arithmetic, then, and some questions
about the forecast.
When we read a paper or hear the news and we see two or
three political or market forecasts which differ by only a
little, that is by less than their confidence limits,
statisticians and those with some training in the subject
are aware that practically and statistically they are much
the same forecast. That's a premise.
Did either your staff or your consultants calculate the
bounds of confidence for the low, high, and reference
forecasts of growth, that is the forecast from slide 30,
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K1.1?
Were the estimates of those --
MR. SHALABY: I would leave that to the next panel
coming up right after lunch. They can address that.
MR. COWAN: I wasn't going to ask how they calculated,
only if they were calculated.
MR. VEGH: Sorry, Madam Chair. It is actually a
methodology question. I think Mr. Cowan is asking about
bands of confidence, and I think the evidence will perhaps
-- without speaking for the evidence, the evidence takes a
different approach, which is high, medium and low, but that
really is a methodology question I think for the forecast
panel.
MR. COWAN: Then I would point out that if there are no
bounds of confidence, you have no basis for knowing that
your forecast is accurate plus or minus 15 percent?
MR. SHALABY: We do know it is indicative and it is
dependent on assumptions, and the load forecasting panel
themselves will tell you that precise numbers are more
likely to be wrong than right. But the band is a good basis
for planning.
I think the emphasis is: Is it a good basis for
planning at this time?
MR. COWAN: But it's a good basis for planning that is
unbounded by limits of confidence, for the time being, at
least?
MR. SHALABY: Well, we express confidence that that is
the --
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MR. COWAN: But not statistical confidence, not
scientifically-derived measured confidence.
MS. NOWINA: Mr. Cowan, it does sound like that is a
better question for the subsequent panel.
MR. COWAN: Okay, we will leave that for later in the
day, possibly, possibly later in the week.
If we could go to reduce, the capacity growth rate -
that is, the 1.2 percent forecast in the reference -
underpins the need for your various investments. So a lower
growth rate, if one could be arrived at, would imply lower
costs.
Would it have opinion possible, at an early stage, to
examine how additional investments in conservation, load
shifting, night storage, et cetera, of between $2 billion
and $15 billion might have been directed to reduce that
forecast growth rate from 1.2 to something less, say, 1
percent or less than 1 percent?
MR. SHALABY: Well, the conservation measures that are
being proposed as part of this plan reduce the demand to
almost zero percent over the long term. It's negative in
the -- it's negative growth in the early years of the plan,
all the way to 2022 or so. We come back to where we are
today in 2022. So it is zero until then.
MR. COWAN: On the slope on the slide, it is actually a
positive growth throughout the forecast period?
MR. SHALABY: Before conservation. Your question is:
With spending of money, would the growth be lower? And the
answer is, yes, with spending of conservation money the
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growth is lower. It is negative.
MR. COWAN: Did you examine, then, any further
increments to those investments that might have made it
still more negative?
MR. SHALABY: The conservation panel will talk about
the feasibility of further reductions. We examined the
feasibility of further conservation at this time and we
indicated we hope it is feasible. We will pursue more, but
we will plan supply to the degree that the conservation
targets that we show are indicated in our plan.
So the only thing that turns on whether more or less
conservation will materialize is whether we plan supply to
be ready to meet the demand that will result from the
conservation programs that we're estimating at this time.
If we're consuming more, and if program success and
technology success, customer acceptance, provides more
confidence going forward, then we will update our
conservation targets next time.
MR. COWAN: Well, there is a program effort to reduce
the growth rate on a consistent basis throughout built into
your method?
MR. SHALABY: Yes.
MR. COWAN: Okay, with respect to reuse - that is,
retained capacity that we'll be looking at here - the second
investment driver of consequence is the existing generation
capacity that carries on through to 2027, and perhaps
beyond. The more that survives, the less new investment
that is needed.
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You determined that about 9 gigawatts of existing
capacity would last through to 2027. Is that a correct
estimate?
MR. SHALABY: It's mostly the hydroelectric generation
-- primarily the hydroelectric generation that will be what
exists today and will survive without additional contracts
or additional investments.
MR. COWAN: A similar question with respect to reducing
then. Did you examine how much more capacity might be
continued in service if the IPSP provided incremental
investments of $1 to $12 billion, for example, in extra
maintenance and refurbishing in order to increase the amount
of capacity that might survive?
MR. SHALABY: Yes.
MR. COWAN: What did you find?
MR. SHALABY: We found that for the nuclear generation
segment of the plan, refurbishment is certainly a viable
option that can extend the useful life of nuclear
facilities, and that decision will be made at the time the
end of their useful life comes up.
MR. COWAN: And recycle --
MR. SHALABY: The same for some of the natural gas
facilities, whether it is NUG-contracted or Lennox-
contracted, these facilities can be maintained -- with
proper maintenance and right management, can last a long
time.
MR. COWAN: Then with respect to recycling, to what
extent does the IPSP envisage recycling components from
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facilities that may be closed, and are these assets planned
for? Does anyone know their value?
MR. PIETREWICZ: First, to directly respond to the
question --
MR. COWAN: Would it be useful if I repeat it?
MR. PIETREWICZ: I think I recall it.
MR. COWAN: Please.
MR. PIETREWICZ: To make sure I do, I think the
question was: Have we considered the potential value of
these facilities sort of in terms of recycling value, in
terms of sort of scrap value, if you will?
MR. COWAN: Well, hopefully more than scrap.
MR. PIETREWICZ: Okay. Then maybe I am not sure I
understood, then.
MR. COWAN: To what extent does the IPSP envisage
recycling significant components from the 16 gigawatts of
facilities that will likely be closed as the use of these
assets planned for?
MR. SHALABY: The most strategic asset that will be
reused are the sites themselves, the generating sites
expanded, and we indicated preference for sites that are in
current use, transmission corridors that are in current use
to be expanded before new sites are -- and new corridors are
explored.
MR. COWAN: Things like --
MR. SHALABY: So the equipment itself is something that
we did not investigate in detail the reuse of existing
facilities, the equipment itself.
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MR. COWAN: Things like thyristors in nuclear plants
are valuable assets, but you didn't consider them?
MR. SHALABY: We did not get into that detail.
MR. COWAN: We would be buying new, then, so far?
MR. SHALABY: Well, we do not specify how proponents
will develop their projects and what extent they will reuse
equipment or go to new equipment.
MR. COWAN: Is there an intent at some point in the not
too distant future to value these kinds of assets?
MR. SHALABY: Not to the level of detail that you are
talking about, specific components of existing generating
stations to be reused. I think we will leave that to the
proponents and developers of these new facilities.
MR. COWAN: The last question, then, I think: Would I
be wrong in guessing that these assets that would be
residual might be valued in the billions?
MR. SHALABY: No, you will not.
MR. COWAN: I beg your pardon?
MR. SHALABY: You will not be wrong.
MR. COWAN: No, okay. So it would be worth thinking
about?
MR. SHALABY: I answered in -- the 10,000 megawatts
that will stay in service by 2027, is that what you meant?
MR. COWAN: No, the scrapped components from the 16
that will not be in service.
MR. SHALABY: Oh, that I don't have a measure on. I
don't have a measure on what that would be. Some of it may
in fact be liabilities, not assets.
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MR. COWAN: Oh, yes, no question.
So in closing, then, we point out that we believe that
the three Rs, the new ones, plus one of the old ones, at
least, are guides to billions in savings and, hence, greater
efficiency and prudence. We feel as farmers that these
three Rs and the other should help guide your further
thinking and be a more conspicuous part of your methods, I
think particularly with respect to reusing.
You have given -- sorry, recycling. You given reuse
and reduction, at least, some apparent thought. Beyond
that, we want you to be assured of the OFA's support in your
efforts to provide Ontario with a clear and sound plan for
conservation and electricity provision. Again, please
accept our thanks and the respect of myself and the farmers
who have sent me.
MR. SHALABY: Thank you, Mr. Cowan.
MS. NOWINA: Thank you, Mr. Cowan. The Board Panel has
a few questions which we will ask you now, before redirect.
Mr. Quesnelle will start.
QUESTIONS FROM THE BOARD:
MR. QUESNELLE: Thank you very much, Madam Chair. I
don't want to take you over areas other than to mention that
-- give you the reference where my questions are coming
from. There was an exchange that you had, Mr. Shalaby, with
both Mr. Shepherd and Mr. Buonaguro the other day and it was
with regard to the notion that seemed to -- your exchange
seemed to change the way they were regarding your evidence
and it was with the reference plan and a discussion on the
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robustness of the plan.
You had mentioned - I don't need to bring you to it -
but it was the discussion on the alternate components or
alternate plans.
Your comments that they were all a real plan. They
were all real plans and that we were to accept them all as
potential outcomes.
I just wanted to make sure that we understand exactly
how that fits in and how we should be looking at it, because
it is -- the characterization in that manner, I see as a
slight variation from the way the evidence was originally
presented. I am not saying it is in conflict with, but it
is a nuance element, that I think is valuable that we pursue
this a little further, and make sure we have this right.
The evidence, in Exhibit D, tab 9, the actual -- I am
reading the resource requirements, schedule 1 in Exhibit D,
tab 9. You speak to the reference plan as being -- this is
the last paragraph on the page, line 22.
MS. NOWINA: Page 1?
MR. QUESNELLE: Sorry, page 1.
MR. SHALABY: D-9-1 on page?
MR. QUESNELLE: Page 1 of 32, schedule 1.
MR. SHALABY: Yes, I see it.
MR. QUESNELLE: Line 22, starting with the sentence:
"The reference conditions reflect a particular set
of expectations or assumptions related to load
forecast, total resource," and continues.
I just wanted to think of that in terms of what you
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mentioned about the other proposals which are highlighted in
G-1-1 under the plan robustness section, and it goes on
about 2A, 2B and the different scenarios with Pickering on
refurbished or not.
I am trying to separate, is there a hierarchy to the
reference plan in relation to the others? Or would they all
fit under that description that I just read to you, that is,
basically they are conditions that reflect a particular set
of expectations or assumptions?
What I am asking you is: Can we apply that definition
to any one of these and should we view them as equal in our
understanding of what may happen? Or are you putting a
hierarchy on the reference plan, and not to provide a
characterization that you may not accept, but is the
reference plan the more likely scenario and the others are
possibilities? Or as you said the other day, they are all
real plans?
I want to go beyond the nuance of this and get your
reaction to that.
MR. SHALABY: I understand your question. And I think
it is -- there is a requirement for specific, what are the
costs of the plan? What are the environmental impacts of
the plan? Thinking in ranges is more difficult than
thinking in straight lines or specific lines.
My estimation is any of the outcomes that we describe
are likely, other outcomes are likely. It is very unlikely
the reference plan will be followed in the exact
expectations that we are documenting here.
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It is provided here for reference, and reference
meaning you would know when demand is higher or lower than
we estimated. You would know whether renewables are higher
or lower. It is just a compass, but not an indication of
any higher likelihood than a band around it, including...
So likelihood of Pickering being developed or not
developed, likelihood of conservation being higher or lower.
I think it is a richer way of thinking about the planning
and it's a range, and the likelihoods are open to current
conditions being different in the future than estimated at
this time.
It is a more complex concept and a more complex way of
thinking about plans, but I think it is a more useful and a
more helpful way of understanding how planning works.
MR. QUESNELLE: Thank you, that's very helpful. Just
one other area and we have, again, this comes from ground
that you have covered quite extensively with others. It's
on the, what is being sought in the approval.
You mentioned a few times and in some detail
methodologies. So I am not going to ask you to come back
and give me more details on what methodologies, I think we
have enough on the record there as a guide. But I am going
to pose a question to you as to whether or not the OPA, in
seeking approval of methodologies - I will put a slightly
different twist on that - and if the Board were to accept
outcomes and accept methodologies as opposed to approving,
do you see any difference in those two basically outcomes
from this proceeding?
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MR. SHALABY: No. They're both an indication that we
have complied with the regulation 424, including the very
many considerations that have to be taken into account.
So if you indicate that we complied with the regulation
424, considered all of the things that are in regulation
424, that is, at least to the non-legal mind, synonymous
with accepting methodology or approving methodology. The
three of them would amount to similar things in our minds.
MR. QUESNELLE: I suppose what I am looking for, do you
see any difference between -- I don't want to tread on the
legality of this, but just from your own perspective -- an
approval being a testing of something as being the
appropriate method as opposed to an acceptance of something
which is maybe one of many?
MR. SHALABY: Perhaps the latter is more realistic.
There is no unique way of doing anything. But if this is
one way that is acceptable amongst many other ways, that
perhaps is reflective of the nature of these methodologies
and the nature of these techniques.
MR. QUESNELLE: That wouldn't fall short of what the
OPA is seeking?
MR. SHALABY: That will not fall short, in my opinion.
I will leave the legal beagles to argue what they like
afterwards.
MR. QUESNELLE: That's all I had, Madam Chair. Thank
you very much.
MR. SHALABY: Thank you.
MR. NOWINA: I have a couple of questions, Mr. Shalaby,
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and I will just -- or Mr. Pietrewicz, whichever one of you
wants to respond.
I will just follow up on Mr. Quesnelle's question, to
be clear on the approvals sought and I won't go back to
whether methodologies are acceptance or approval. I will
put that in the category of that's one of the things that
you stated was you sought approvals on. The other was the
specific procurement contracts within the next few years.
You sought approval for those; is that right?
MR. SHALABY: Authority to procure --
MS. NOWINA: Authority to procure.
MR. SHALABY: -- the three specific facilities we talked
about.
MS. NOWINA: Right. And then I am a little bit less
certain on approval for initiatives to develop potential
procurements or transmission in the future. Are you seeking
approval for that, as well?
MR. SHALABY: Not to the OPA. The OPA will not develop
transmission options, nor will it conduct RFPs for
transmission options.
It is acceptance perhaps that transmitters develop
these and I don't know the nature of the -- that
transmitters will seek your approval, whether it is in
budgetary terms or -- in other ways that they will seek
through license conditions or otherwise.
So we are -- more generally, we're saying to
transmitters, that these options -- the seven or eight or
nine options we talked about are -- it's in the interests of
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the customers in Ontario to develop these options further.
And whether the money they spent on that and the effort
they spent on that needs to be approved at this Board in
their rate hearings or their capital program hearings or
section 92 proceedings, we are less specific about that.
But we do not seek approval ourselves for the proceeding of
transmission options. It's transmitters that would seek
that.
MS. NOWINA: All right, I understand. They have future
requirements for approvals before this Board if they want to
construct, in any case.
MR. SHALABY: Yes.
MS. NOWINA: But it brings me to a broader question
about what approval of the plan may be. The Electricity Act
says the Board may approve a plan or refer it back. That's
the wording.
So from your discussion with Mr. Quesnelle, I take that
plan to be a range of outcomes that you have discussed that
are more certain in the first three years, far less certain
in the future, and you may bring it back for refinement of
that -- will bring it back every three years.
So I understand that plan to be a range of outcomes.
So when we approve a plan, do we approve that range of
outcomes as being -- perhaps we can use the word is
"reasonable" over the time frame of plan, and the
development that you are suggesting is also reasonable
within the time frame of that plan?
I don't want to put words in your mouth, but would that
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be an adequate way to describe the approvals that are
required?
MR. SHALABY: That would be an adequate way. And I
would take us back to slide 4 in the deck that were
presented on day 1 that describes, What is the plan? And
the plan is the capability to meet Ontario's needs under a
range of conditions.
So in approving the plan, it may be helpful to go back
to what we think the plan is. The plan is an implementation
of supply mix directive, its capability, the plan's
capability to meet a range of conditions.
It is a set of planning methodologies and approaches.
So the three things -- three of the five bullets describe if
you accept planning methodologies and approaches, if you
grant us the capability to meet a range of conditions and if
you accept that we have met the supply mix directive, that
constitutes acceptance or approval of the plan, in our
minds.
MS. NOWINA: Thanks. That's helpful. Then my second
and last question is about your six planning criteria. I
hesitate to take you back there, but I will, because I am
developing a mental image and I want to be very certain that
my mental image is correct in what you intended me to take
from your evidence in your cross-examination.
I took from your evidence, especially the oral evidence
over the last week or so, is that those criteria have been
applied by the OPA essentially as a series of gates, that
the feasibility gate must be passed before the reliability
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gate is considered, and so forth, so that when you get to
the final gate, the environmental process and the societal
acceptance, there was no difference, because everything
essentially had been weeded out through the other gates. Is
my mental image correct?
MR. SHALABY: It can be enhanced by knowing that the
things that are put through the filters or the gates are
themselves deemed to be acceptable and deemed to be
environmentally -- can be met in -- meet environmental
protection, safety and regulations going forward.
So it is not a random take, and then if they pass the
first four filters they're acceptable. They're put in with
judgment about their acceptability at the beginning, as
well.
MS. NOWINA: So you almost have a threshold test that
they meet environmental standards?
MR. SHALABY: Yes.
MS. NOWINA: Is that how I took your evidence?
MR. SHALABY: Yes.
MS. NOWINA: Then they go through the series of gates.
Then beyond the environmental standards, any benefit above
those standards essentially made no difference when you
reached those last two gates, because they had been filtered
out at that point?
MR. SHALABY: If the results of putting them together
results in violating the collective result -- for example,
emissions. Any one of the generators can meet environmental
protection standards, emission standards locally, but
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together they result in a larger amount of SO2 or CO2 or NOx
than the collective provincial standards.
That's when we look at them in collective fashion.
MS. NOWINA: All right. Thank you.
MR. SHALABY: And the range of options what we examined
met both individual standards and the collective standards
at the end, but they could violate collective standards at
the end. So in the case that we presented, the reference
case and its variations, they did not violate the collective
standards, as well.
MS. NOWINA: All right. Thank you. That's very
helpful. That concludes the first panel. Thank you very
much, gentlemen. It's been a long week or so.
MR. VEGH: I have re-examination.
MS. NOWINA: Let me finish thanking them, Mr. Vegh, and
then I will pass them over to you.
MR. VEGH: Sorry.
MS. NOWINA: However, we will see you again very
shortly, Mr. Pietrewicz and, you, Mr. Shalaby, later.
Mr. Vegh, you had a point?
RE-EXAMINATION BY MR. VEGH:
MR. VEGH: I do apologize for interjecting, Madam
Chair, but Mr. Shalaby is in a hurry to get out.
MS. NOWINA: He is trying to bolt through the door,
yes.
MR. SHALABY: I made a forecast that turned out to be
wrong, several days out.
MR. VEGH: Panel, I have some questions of
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clarification on some rather mundane issues that are not
going to reach the level of sophistication and intelligence
that you have been hearing questions on for the first week,
but there are some pretty technical points I would like to
clarify that come out off the evidence.
Just to have handy, I will be referring to volumes 2
and 5 of the transcript, as well as to Exhibit K2.1, which
is the GEC cross-examination materials.
MR. SHALABY: Yes, we have it.
MR. VEGH: Okay. First, at volume 2 of the transcript,
Mr. Shalaby, you were asked questions by Mr. Poch on the
attributes of CHP. So that's at pages 168 to 169. It
really starts with the question at page 168, at line 20.
And he, Mr. Poch, is describing to you the attributes
of CHP and says that:
"CHP is a little unusual. It has some of those
attributes about the ability to follow load on a
planning time line and on a diurnal and seasonal
operating time frame."
He goes on. And there was some confusion in the answer
where he clarifies he was looking for -- was talking about
CHP at line is 1 on page 169, and again he asks you some
questions. Then on page, line 5 of page 169, he says:
"It naturally has those attributes."
It wasn't clear to me, from reading the questions and
answers, because he went back and forth a bit, about what
load the CHP is following. Is it the load of the customer
or the load of the system? What are the attributes of load
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following that you are talking about in that section?
MR. SHALABY: It was clear in line 2 of 169, page 169,
that it typically follows a steam load. Combined heat and
power is, as it indicates, a facility that generates both
steam and electricity.
Typically, the steam requirement is the driver for how
the facility operates. It meets the steam requirements of
the host, and electricity is a by-product that is generated
as the steam is generated. So my answer is very clear. It
typically follows a steam load.
MR. VEGH: Could you just elaborate on what is the
difference between that, if any, the steam load of the
customer and of the system, and why that is relevant for
planning purposes?
MR. SHALABY: There is -- there could be correlation,
but typically there isn't, or maybe some consumers, it will
be correlated, the electricity consumption and steam
consumption. But, as an example, steam demand can be higher
in the wintertime, and electricity generated with it is
generated in the wintertime. There may not be steam
requirements in the summertime if it's a university
facility, for example, or a hospital. Or the requirements
for steam are lower in the summertime than the wintertime.
The demand for the system for electricity is higher in
the summer than the winter. So there could be a difference
in the requirements for electricity in the system basis and
the requirements for steam in the specific facilities of a
particular customer. And this varies from customer to
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customer and varies from season to season and many, many
other considerations to do with the specific requirements on
a specific site.
MR. VEGH: Thank you. My next question, I think it is
for you, Mr. Pietrewicz, and it comes out of the GEC cross-
examination materials, Exhibit K2.1. One of the attachments
to K2.1 is the IESO operability report.
This is in the evidence elsewhere, as well, but in is a
handy place to refer to it. And particularly at page 15 of
the IESO operability report there is a discussion of the
results of surplus base-load generation.
MR. PIETREWICZ: Yes, I see it.
MR. VEGH: You were asked some questions about that, I
think from several parties. The one in particular that was
asking you questions about the issue of excess base-load
generation and how it arises during the course of the plan
was Mr. Poch and that's -- I won't take you to it at volume
3, page 60 where there are some questions about instances of
excess base-load generation.
I know that Ms. Wright from the IESO will be available
to address this report. But there were a lot of questions
about the increase in excess base-load generation during the
period 2012 to 2014. That's demonstrated on table 3, and I
think elsewhere throughout the document you see the increase
from 2012 to 2014.
Can you tell me what that increase -- if you know, what
is that increase attributable to?
MR. PIETREWICZ: Specifically, I am not sure I can
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narrow it down to a specific --
[Witness panel confers]
MR. PIETREWICZ: -- single resource. However, I can
provide what I know to be the context during this period.
There are several things happening during this period, 2012
to 2014.
First of all, we have -- we approached pretty much the
full complement of nuclear generation in Ontario at this
time. So specifically, the return to service of the Bruce A
units that are expected to go, undergo refurbishment prior
to that. So that is really the change in nuclear
availability during that period.
In addition, I imagine we have, as simulated, we have a
considerable increase in the amount of other types of
generation resources or conservation resources, including
planned or committed wind power, including committed water
power, committed conservation, and CHP resources.
In addition, as simulated, we continue to have some
amount of coal-fired generation available during this
period, which I would expect would contribute to the base-
load production in this particular simulation.
MR. VEGH: Thank you.
Finally, to you, Mr. Shalaby, at volume 5 of the
transcript, page 167, Mr. Manning is asking you some
questions about the prefiled evidence and there's a
quotation from the prefiled evidence in the middle of page
167 at line 12, and the reference is to Exhibit E-3-5. And
there is a quotation from that evidence.
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And the cross-examination lays out the quotation. I
won't read all of it, but it starts with the sentence, "The
OPA recommends that a purchase with Manitoba be further
explored." Then I think Mr. Manning spent considerable time,
I believe over the next ten pages, focussing on what the
word "recommend" means or emphasizing "recommend" and just
what that term is meant to mean in this evidence.
And my question for you -- and you had a back and forth
and a discussion around what that term might mean.
My question for you, Mr. Shalaby, this is Exhibit E-3-
5, were you the primary author of Exhibit E-3-5?
MR. SHALABY: No.
MR. VEGH: Who was?
MR. SHALABY: The transmission panel that will be
coming in here in future panels coming in. So my planning
staff.
MR. VEGH: That's more Mr. Chow and Mr. Young, I think?
MR. SHALABY: Yes.
MR. VEGH: So it might make more sense that we raise
that question with them in terms of the intention of what
was meant by the word "recommendation."
Thank you, those are my questions, Madam Chair.
MS. NOWINA: Thank you very much. Thank you, again,
witness panel.
We will take our lunch break now. When we return we
will begin the panel on reference forecast and reserve
requirements, Mr. Vegh, with your direct. And then Mr.
Buonaguro you are first up? No?
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MR. SHEPHERD: Madam Chair, Mr. Buonaguro has
graciously allowed me to go first as I have another
commitment later.
MS. NOWINA: All right, Mr. Shepherd.
We will break until -- I will give you your hour and a
half. So we will return at 2:25 and then we probably will
not have an afternoon break. We will go through until 4:30
at that point.
--- Luncheon recess taken at 12:55 p.m.
--- Upon resuming at 2:33 p.m.
PROCEDURAL MATTERS:
MS. NOWINA: Please be seated.
Welcome, ladies and gentlemen, and new witness panel.
Before we begin with the new witness panel, I would like to
make a comment on our schedule.
Board Staff has given me the estimates that you have
given them on this panel, and, frankly, it makes me very
nervous about the length of this proceeding overall. If we
extrapolate from what we're seeing here to the remainder of
the proceeding, we're all going to be here for a very long
time.
I am not sure that being here for a very long time
serves anyone's interest or serves the public interest. So
a couple of comments that I would like to make, based on our
experience of the first panel: First, that I expect cross-
examiners to go fairly quickly to their questions. I don't
expect a lot of preamble, and I don't expect essentially
argument or putting positions on the record as part of
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cross-examination.
For parties who follow later in the process, I don't
expect repetition of questions that have already been asked
and answered, unless you truly require clarification, and
that's fine.
But the end result is that for those people who are
taking a lead in the cross-examination, the first couple up,
when I see large amounts of time, I expect that and I have
no problem with that. But when I see folks that are towards
the end of the cross-examination schedule and they require
vast amounts of time, I am concerned about that and I would
ask them to consider whether or not they can shorten their
cross-examination.
Now, all of that is not to say that the cross-
examination of the first panel wasn't valuable or helpful.
It was. It was very good, and we were pleased with what we
learned there. But we also learned some procedural things
that hopefully will help us going forward, so I would like
you all to take that to heart, and we will find some kind of
prize for the person who talks to Ms. Lea and gives her the
largest reduction in their estimate.
Conservation is the key word, yes, Dr. Balsillie says.
All right, enough said. Mr. Vegh, do you want to
introduce your panel?
MR. VEGH: Thank you, Madam Chair. As you can tell,
it's a large panel, so I would like to lay out quickly how I
propose to present this panel.
First, I propose to have the witnesses sworn. Then I
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will introduce each of them very shortly for the record and
point up their CVs, not go through a lot of detail, and then
after the witnesses are introduced, I was going to address,
just for the benefit of the parties and the Panel, a bit of
the CIMS issue; that is, where does this evidence lead off
and how does it feed into some of the other sections?
That came you are during the cross-examination of the
initial panel. It might be helpful to sort of set that out
up front. I do that not in the way of giving evidence, but
as a guide to the witnesses.
MS. NOWINA: All right. Thank you, Mr. Vegh.
MR. VEGH: So if I could have the witnesses sworn,
please.
MS. LEA: I think, Mr. Vegh, some of them have been
sworn, because they were here for the initial presentation,
so perhaps those who haven't been sworn, please come
forward.
ONTARIO POWER AUTHORITY – PANEL 3 – REFERENCE FORECAST
AND RESERVE REQUIREMENTS
^Martin Adelaar, Affirmed
^Christopher Bataille, Affirmed
^Lily Buja-Bijunas, Previously Sworn.
^Karen Frecker, Previously Sworn.
^Bob Gibbons, Previously Sworn.
^Andrew Pietrewicz, Previously Sworn.
^Victor Stein, Affirmed
MS. NOWINA: You can go ahead, Mr. Vegh.
EXAMINATION BY MR. VEGH:
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MR. VEGH: Thank you, Madam Chair. So just in terms of
where we are in the proceeding, at Exhibit K1.2, the third
box in the table is a reference forecast and reserve
requirements panel and there is a list of all of the members
on that panel.
In the introductory evidence on the first day at
Exhibit K1.1, this panel will be addressing slides 25 to 36
of the introductory evidence that is a reference forecast,
and reserve requirements. So what I propose to do, Madam
Chair, is, for each member of the panel, to introduce them
by reference to their CVs, and those are at Exhibit A, tab
7, schedule 1.
All I propose to do, Madam Chair is, identify the
witness for the benefit of the parties, point them to their
CV and ask them to briefly -- point them to their CV. I
will refer to their evidence that they are speaking to and
ask them to briefly identify their experience and how that
is relevant to the evidence.
I don't propose to go through the entire CV for the
panel.
So if I could start with you, Ms. Buja-Bijunas. Good
afternoon.
MS. BUJA-BIJUNAS: Good afternoon.
MR. VEGH: Your CV is at Exhibit A-7-1, page 1. I
understand that you will be giving evidence, the lead OPA
evidence, on the load forecast?
MS. BUJA-BIJUNAS: That's correct.
MR. VEGH: And that's at Exhibit D-1-1.
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MS. BUJA-BIJUNAS: That's correct.
MR. VEGH: And so, Ms. Buja-Bijunas, can you just
briefly describe how your experience is relevant to this
evidence?
MS. BUJA-BIJUNAS: Before joining the OPA, I worked in
a load forecasting capacity at Ontario Hydro for eight
years.
Can you hear me? Oh, can you hear me now? Okay.
Before joining the OPA, I worked in a load forecasting
capacity at Ontario Hydro for eight years.
MR. VEGH: Thank you, Ms. Buja-Bijunas. And to your
right is Mr. Martin Adelaar. Good afternoon, Mr. Adelaar.
MR. ADELAAR: Good afternoon.
MR. VEGH: Your CV is at Exhibit A-7-3 -- A-7-3, page
1; is that correct?
MR. ADELAAR: That's correct.
MR. VEGH: And you will be -- the evidence that you
prepared or participated in is at Exhibit D-1, attachment A-
3.
MR. ADELAAR: That's correct.
MR. VEGH: And, Mr. Adelaar, could you please provide
the panel with a brief description of your experience and
how it is relevant to the evidence that you prepared?
MR. ADELAAR: I have been working in the field of
energy efficiency and energy management for over 25 years in
all three sectors, residential, commercial and industrial.
MR. VEGH: Thank you, Mr. Adelaar.
On Ms. Buja-Bijunas's left is Chris Bataille. Good
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afternoon, Mr. Bataille.
MR. BATAILLE: Good afternoon.
MR. VEGH: Your CV is at Exhibit A-7-2, page 1.
MR. BATAILLE: Yes.
MR. VEGH: And I understand you will be speaking to
Exhibit D-1-1, A-3, along with Mr. Adelaar, as well as to
Exhibit D-4-1, attachment 6, which add addresses the CIMS
methodology of MKJA?
MR. BATAILLE: Yes. I have been an energy and
environmental policy analyst for the last 11 years and one
of the co-creators of the CIMS model.
MR. VEGH: Thank you. Then to your left, Karen
Frecker. Good afternoon, Ms. Frecker.
MS. FRECKER: Good afternoon.
MR. VEGH: Your CV is at Exhibit A-7-1, page 7?
MS. FRECKER: It is.
MR. VEGH: And perhaps you could address your role in
preparing this evidence.
MS. FRECKER: I have been a power system planner with
the OPA since May of 2005. During that time, I participated
in the development of the supply mix advice, the load
forecast conservation and discussion papers, as well as
completing analysis related to the current evidence before
the Board with respect to load forecasting.
MR. VEGH: Thank you, Ms. Frecker. And I know you are
fairly new to this, but think about it. A week ago Mr.
Pietrewicz didn't have any experience in front of the Board
either, and now he is an old pro.
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[Laughter]
MR. VEGH: So that's the load forecast side of the
panel. And also on this panel we have the reserve
requirement side of the panel, and I will just reintroduce
you to Mr. Pietrewicz. You have seen his CV and you have
heard his experience already, so I will just say hello to
the panel.
MR. PIETREWICZ: Good afternoon, Madam Chair, Members
of the Panel.
MS. NOWINA: Nice to see you back, Mr. Pietrewicz. We
were afraid you wouldn't come back.
MR. VEGH: Next to Mr. Pietrewicz is Bob Gibbons. Good
afternoon, Mr. Gibbons.
MR. GIBBONS: Good afternoon, Mr. Vegh.
MR. VEGH: Your CV is at Exhibit A-7-1, page 8; is that
right?
MR. GIBBONS: That's correct.
SPEAKER 1: Could you please briefly outline your
experience and how it is relevant to the evidence that you
will be addressing on this panel.
MR. GIBBONS: I joined the OPA in 2005 as director of
resource integration. Before joining the Ontario Power
Authority, I was manager of long-term forecast and
assessment with the Independent Electricity System Operator,
since its inception in 2000.
In this position, I was responsible for producing the
quarterly 18-month outlooks as well as the annual ten-year
forecasts of generation and transmission adequacy.
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I was involved with the determination of NPCC reserve
requirements and participation in NPCC and NERC committees.
Before that, I was with Ontario Hydro for about 28
years in various operations and planning functions.
MR. VEGH: Sorry, Mr. Gibbons, I should have said at
the outset that your evidence is going to relate to Exhibits
D-2-1 and D-3-1.
MR. GIBBONS: That's correct.
MR. VEGH: Next to Mr. Gibbons is Mr. Victor Stein.
Good afternoon, Mr. Stein.
MR. STEIN: Good afternoon.
MR. VEGH: Your CV is at Exhibit A-7-1, page 14.
MR. STEIN: Yes. Yes.
MR. VEGH: And you will also be addressing
Exhibits D-2-1 and D-3-1.
MR. STEIN: Yes.
MR. VEGH: Could you please outline for the panel some
of your experience and how it is relevant to the evidence
you are presenting.
MR. STEIN: I have been an economist for more than 30
years. I have been – I started off as an economic analyst
over at the Ontario Ministry of Finance. I taught economics
at Ryerson University. I did economic planning and
engineering, economic analysis at Ontario Hydro and its
successor company, Hydro One. I have led seminars on
macroeconomic impact analysis and I have presented
professional papers on benefit-cost analysis. And I have
been advisor at the Ontario Ministry of Energy.
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MR. VEGH: Thank you, Mr. Stein.
Before presenting the panel for cross-examination,
Madam Chair, as I indicated, I thought it might be helpful
at the outset to just address, as I say, the CIMS between
the issues addressed by this panel and subsequent panels.
First, on the reference forecast side of the panel,
that is the four people on the far end, the reference
forecast is a stand-alone piece of evidence in D-1-1 and it
incorporates information provided by the external
consultants, Mr. Adelaar and Mr. Bataille. The one CIMS
issue that does arise is with respect to the evidence on the
reference forecast and the evidence with respect to
conservation.
The two are linked in a couple of ways, in the sense
that the reference forecast has naturally occurring
conservation built into it and so I think that issue has
become clear over the first week. But if people want to
address the issue of naturally occurring conservation and
how it goes into the reference forecast, this is really the
panel to address that.
The other issue of CIMS is that the two external
consultants, Mr. Adelaar and Mr. Bataille, provide -- also
provided evidence that is relied upon by the conservation
evidence with respect to the potential of various sources of
conservation.
Now, they're here today, but the plan is not to have
them present as part of the conservation panel. When we met
with the parties and Board Staff on procedures day, we
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proposed that approach because they're really, frankly,
wasn't a lot of interrogatories or interest in terms of the
potential of conservation models. The real issue was with
respect to how the OPA made use of that information in
coming up with the conservation plan.
So we would say to the parties, if they do have
questions on conservation potential materials prepared by
Mr. Adelaar or Mr. Bataille, and they do want those
addressed on the record, that this would be the opportunity
even though it is a bit out of step, but they won't be back
for the conservation panel.
So that's the -- kind of the CIMS issue between this
panel and the conservation panel coming up, and I am sure we
will find in the questioning that there may be more CIMS
issue but those were the ones that present themselves to me,
obviously.
With respect to the reserve requirement side, the left
side of the -- or your left side of the panel, the main CIMS
issues, I believe, will arise with respect to Exhibit D-3-1,
which sets the base-load requirements and the peaking
requirements as resource requirements of the plan.
So that piece, D-3-1; and then the other pieces of the
substantive evidence, which look at how those requirements
are met, particularly D-6-1 and D-8-1. I will just break it
up a little bit. D-3-1, as Mr. Gibbons addressed on the
first day, addresses the resource requirements by reference
to base load, intermediate, and peak requirements. So the
base-load requirements of the plan, the base-load resource
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requirements are addressed in Exhibit D-3-1.
Then later on, when we get to the panel that's dealing
with non-renewable resources, they will be addressing how
nuclear, in particular, contributes to meeting the base-load
requirement, how other components of the – nuclear, in
particular, but of course other resources also contribute to
meeting the base-load requirements. So this panel addresses
how the requirement was established. Subsequent panels will
address how that requirement was met through different types
of resources.
I am going to come back to that in a minute, because
it's -- part of the story is a bit complicated. But just to
finish, in terms of D-3-1 it says the base-load requirement.
It also sets the peaking requirements for the plan, the
peaking resource requirements, that's addressed in Exhibit
D-3-1, but then Exhibit D-8-1 which addresses natural gas
addresses how natural gas is used to meet that peaking
requirement.
So again, this panel addresses how the requirements are
set. Subsequent panels will address how the requirements
are met.
I want to go back to D-3-1 again because when we get to
the base-load requirements, there is -- what Mr. Shalaby
referred to as a bit of circularity. And I just want to
unpack it again.
So D-3-1 sets the base-load requirement. The base-load
requirements are set by an economic model which looks at how
different resources contribute to meeting base-load
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requirements.
So it looks at the incremental -- it's an economic
measure of base load. It looks at how incremental resources
contribute to meeting that requirement, and that involves a
review of the costs of those resources.
So it is in D-3-1 where you find the evidence with
respect to, in particular, the cost of nuclear to meet base
load, the alternative cost of combined cycle gas turbine to
meet base load, and where those costs intersect to meet the
-- to determine the incremental base-load requirements of
the plan.
I say this, because I have spoken to many parties who
are particularly interested in the cost of nuclear and have
let them know that our evidence with respect to the capital
costs of nuclear, the discount rate for nuclear, and the
capital costs and commodity costs for combined cycle gas
turbines to meet base-load requirements, they're all
addressed in Exhibit D-3-1.
So this is the panel to receive and deal with those
issues.
MR. POCH: Madam Chair, let me interrupt my friend just
to get some clarification there. I certainly didn't have the
understanding that this is the panel we were to cross-
examine about nuclear costs. I had understood the earlier
comment that this is the panel that is going to talk about
the methodology by which you find crossover points, for
example. But that if I want to ask you about, you know,
nuclear capital cost overruns, that's for the nuclear panel.
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Am I wrong about that? Because if I am wrong about
that, from what Mr. Vegh just says, I think probably a
number of us have a problem.
MR. VEGH: Well...
MR. POCH: I am not sure what is left to talk about
nuclear. You know, because, of course, that crossover is
affected by the assumptions about nuclear performance, about
nuclear costs, about nuclear -- all of those things.
I am not -- quite frankly at a loss to imagine what is
left for the nuclear panel, then. I will let my friend
respond.
MR. VEGH: Sure. Well, as is set out for a -- while,
D-3-1, the evidence that sets the base-load requirement,
sets a base-load requirement by reference to a methodology.
The methodology bears the costs of nuclear and alternatives
to meet that requirement.
That methodology and the interrogatories that go to
methodology address capital costs, discount rates for
nuclear. That's where you find the evidence on nuclear, on
the costs of nuclear, is in D-3-1.
Then when you go to the evidence in D-6-1, it simply
adopts those costs. So D-6-1 doesn't give any information
on the costs of nuclear. It simply applies the findings
from D-3-1.
This is why I wanted to raise this issue now, because I
had more detailed conversations with some of the parties
than with others, but this is really a D-3-1 issue.
MR. POCH: We all understand, Madam Chair, that the
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tests that are being discussed here that the OPA used to
divide -- to define base load to decide, you know, where the
crossovers were, I fully understand that that's for this
panel.
But I saw Mr. Shepherd, at least, and others nod. I
don't think any of us thought that the inputs to that test,
per se, are for discussion here, although obviously we might
hypothesize, if this input changes this much, what happens
to the shift point.
But is my friend -- I really want my friend to be
clear, and then we can discuss what to do about it. Is Mr.
Vegh saying to you any questions we have about those inputs,
nuclear costs, nuclear performance, and so on, are for this
panel, then; or can we save those for the nuclear panel,
and, similarly, for gas and so on?
MR. VEGH: Madam Chair, I think an approach that makes
sense is, if we look at the non-renewable panel, it's the
same people.
MS. NOWINA: I did notice that, Mr. Vegh.
MR. VEGH: So I am not trying to make an issue where
there isn't one.
I would actually propose that this panel restrict
itself to methodology as much as possible, but the reality
is that's where the numbers are and that's where the
methodology does intersect. I think we could -- so the
approach is really to look at the base-load requirements by
reference to methodology. The methodology has assumptions.
You change the assumptions; you change the base-load
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requirements of the plan.
Madam Chair, what I propose is people address what they
can from D-3-1, and I will leave it to your good guidance to
ensure that parties are not sort of taking two shots at
cross-examining on the same issue. We know it is an
important issue, so we will get a thorough cross-examination
here.
So what I propose is that in fact with this panel,
people take a methodological approach, recognizing that this
is where the information is. So if you want to go into the
numbers, you can go into the numbers here, but this panel
will also be available to address the nuclear for base-load
issues in D-6-1.
So I am just warning at the outset that distinction may
not be always possible to keep, but I trust you to just
manage it as a matter of fairness, as well.
MS. NOWINA: Mr. Shepherd, did you have any thoughts on
this?
MR. SHEPHERD: Madam Chair, I have no questions on
nuclear costs for the reference forecast and reserve
requirement panel. I will have lots for the non-renewable
supply panel. So I can make the distinction, but my
distinction would be I will ask the questions when we get to
the supply option. I have none prepared today.
MS. NOWINA: So given that, Mr. Vegh, are you
comfortable with - there are a number of the same people
still before us - Mr. Shepherd asking those questions at the
time that panel comes up?
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MR. VEGH: As I say, I trust you to run a fair process,
so that -- I think that is fair. I think that is fair to
the parties, and that's why I wanted to alert them to this
now.
It's just that when we get to the non-renewable
resources, we will just be doing some back and forth between
D-3-1 and D-6-1. I think at this stage we will sort of see
how it goes.
MS. NOWINA: Mr. Shepherd will be our experiment.
MR. SHEPHERD: Oh, joy.
MS. NOWINA: Anything else, Mr. Vegh?
MR. VEGH: Perhaps just to draw one more link between
D-3-1 and D-6-1, and this is pushing things into D-6-1, so I
think it is where the parties want to go, but I just thought
I would make it explicit, as well.
So in D-3-1 there is -- the reserve requirement panel
will be addressing: What are the base-load requirements?
But then parties should also be aware, as they get to
subsequent panels -- so if this panel tells you what the gap
is, what the base-load requirement is, and you want to
address, well, how is conservation contributing to that,
that could be addressed by the conservation panel, as well
as the nuclear for base-load panel in D-6-1, or if people
want to address how renewable supply can contribute to
meeting base-load requirements, that could be addressed both
in the renewable panel and in D-6-1.
The caution is that by the time we get to D-6-1, this
is going to be more of an issue for conservation than anyone
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else. The panel we have addressing D-6-1, these supply
resources people, will sort of take as a given that they've
applied the renewable resources to base load, they have
applied the conservation to meet the base-load requirements,
and at that stage you are looking at the incremental base-
load requirements, which are really nuclear power at that
stage.
So perhaps I am foreshadowing too much and making it a
bit too complicated, but there are a lot of moving parts in
this application, and they do hang together, so I wanted to
lay it out a little bit.
MS. NOWINA: I appreciate the attempt to be helpful,
and I am sure it was.
MR. VEGH: To someone. Now, with that, Madam Chair, I
would like to present the forecast and reserve requirement
panel for cross-examination.
MS. NOWINA: Thank you. Mr. Shepherd.
CROSS-EXAMINATION BY MR. SHEPHERD:
MR. SHEPHERD: Thank you, Madam Chair. And can you
hear me okay?
Mr. Buonaguro has allowed me to go first because I have
a commitment, and so I don't actually have the lead cross
and I am not going to be covering all of the bases. Rather,
I have some particular points I want to cover, so I will
just get to them hopefully, surgically.
I represent the School Energy Coalition, for those of
you who don't know me, and our interest in this proceeding
is the long-term viability of the plan. While we're
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interested in short-term rate implications, our primary
focus is the long term.
As I understand the approach you took on the load
forecast - let's start with load forecast - you started with
the CIMS model, which is your model, Mr. Bataille?
MR. BATAILLE: It's not mine, but, yes.
MR. SHEPHERD: And Dr. Jaccard. And that's a detailed
model of energy consumption and economic inputs; right?
It's a combined -- it's a binary model?
MR. BATAILLE: Yes. It is a technology simulation
model designed to simulate the energy using technology stock
moving forward in the future.
MR. SHEPHERD: At its essence, it aggregates end uses;
right?
MR. BATAILLE: It -- I would not say it aggregates.
There is a certain breakdown of end uses within the model,
and those end uses tend to be defined by the heterogeneity
of uses within given sectors, industrial -- various
industrial sectors, household, commercial, what have you.
MR. SHEPHERD: So in the old-style notion of bottom-up
versus top-down models, is it one, the other or both?
MR. BATAILLE: It began as a bottom-up model, but the
long-term plan has been to make it what we call a hybrid
model, so it combines the best of both worlds. It brings in
the macroeconomic realism and the market dynamics of the
top-down model, and the technological realism of the bottom-
up model, and you will know why both -- the advantages of
both are there.
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MR. SHEPHERD: Yes, I understand. Now, this has things
like, for example, price elasticity built right into the
model; right?
MR. BATAILLE: It does for final end use demands, but
that function was not used for this project.
MR. SHEPHERD: Oh. Well, then before I go on with the
model, how was price elasticity considered in this load
forecast, if it wasn't in the model?
[Witness panel confers]
MS. BUJA-BIJUNAS: We were provided with elasticities
by M.K. Jaccard & Associates. What I want to stress is that
the way it was described to us was that there were not --
actually, it's on. Can you hear me? Can you hear me now?
MR. SHEPHERD: Take the hand mike.
MS. BUJA-BIJUNAS: Can you hear me now?
MR. SHEPHERD: Yes.
MS. BUJA-BIJUNAS: Okay, thank you. We received
elasticities from M.K. Jaccard & Associates and those
elasticities are actually in the evidence, in D-1-1. The
way it was described to us was that there are no explicit
elasticities that are put into the model that was used for
us. But rather, one can indirectly extract elasticities
through the model runs.
In other words, if you do a model run and then you --
with one set of prices, and then you shock the model with
another set of prices, you can, from that, calculate out
what the net impact is due to that price change which is a
way of getting at elasticities. But there isn't a set of
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elasticities that is, you know, hard-wired or put in as
assumptions into the model. It comes out of the model.
MR. SHEPHERD: Sorry, I wasn't actually asking about
the technical aspect of elasticities, i.e., the relationship
between price and load. I was asking whether the model
itself adjusts to price, that is, you put in price
assumptions and it changes the load result; right?
MR. BATAILLE: Yes.
MR. SHEPHERD: And there's a built in elasticity
assumption that does that; right?
MR. BATAILLE: Okay. Just to make a point of
clarification. I didn't hear you correctly here. I was
thinking the final end-good elasticity. And I didn't
realize you were talking about energy elasticities.
What the model does is it evolves the technology stock
through time, okay. There is a suite -- you start out with
a given set of technologies in the model in a base year,
then moving forward through time that gradually retires and
amortizes and we have to replace that in order to meet given
demand, okay. And the replacement algorithms are designed
to mimic firm and consumer investment behaviour as
accurately as possible.
So what happens is as energy prices change, you get a
different capital stock profile evolving through time and
effectively you get, as say natural gas prices change,
electricity prices changes, you will get a differing
electricity or natural gas demand.
But it doesn't need -- it doesn't operate on
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elasticities. It operates on the evolution of the capital
stock, in response to factor input prices.
MR. SHEPHERD: If input prices are higher, the effect
is that you will get a different technology mix because
people will be willing to spend more for an efficient
technology? So it can pass thresholds, for example, that
wouldn't be cost-effective at a lower price.
MR. BATAILLE: It does that with all -- inputs relevant
to the energies and capital stock. So capital, the various
forms of energy, emissions -- and emissions, the various
efficiency, CO2, what have you.
MR. SHEPHERD: Now, there is a set of inputs you have
to determine when you run a model; right? And there are
default inputs for price, for economic indicators, et
cetera, there are defaults and then you can choose which you
want for various things; correct?
MR. BATAILLE: Yes. Any model is an assembly of input
assumptions.
MR. SHEPHERD: And do we have somewhere in the evidence
a statement of the choices that were made for all of those
inputs for this, the model run is that is the basis for the
reference forecast?
MS. BUJA-BIJUNAS: It's in a few locations. The main
location actually is in D-4-1, attachment 6. D-4-1,
attachment 6 gives the report written by Mark Jaccard &
Associates detailing how they produced the reference
forecast and the energy efficiency-conservation potential.
It lists how the model, the various industries, it
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lists the drivers, in terms of price. It lists the physical
unit drivers in terms of households and parameters like
that.
MR. SHEPHERD: Okay.
MS. BUJA-BIJUNAS: The other area where you could find
information is in response to interrogatory - I can't
remember exactly which one it is. I will have to look it up
- where we actually provide all of the stock information,
the penetrations of technologies, specifically which
technologies are present in the base year and throughout the
forecast.
It is definitely in an interrogatory and I can't
remember what it is.
MS. FRECKER: It is in the GEC interrogatory. I can't
recall the specific number.
MR. SHEPHERD: We will track it down. Thank you. Now,
if I understand correctly -- those are the places where you
have the inputs, right, so all of the inputs are in one of
those two places? You don't have some additional inputs
that we don't know about?
MS. BUJA-BIJUNAS: All of the inputs and the outputs
should be in those locations and then the final tabulations
are also in D-1-1.
MR. SHEPHERD: Okay. Now, you didn't actually use the
CIMS output numbers themselves, you made an adjustment? And
if I understand what you did, you started with the CIMS
number for 2005, 143.1 terawatt-hours and then you compared
it to the actual for Ontario using the IESO numbers which
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was 155.0 and you said that the CIMS number is at the
generator --
MS. BUJA-BIJUNAS: No. CIMS is actually at the
customer.
MR. SHEPHERD: Sorry, at the customer.
MS. BUJA-BIJUNAS: Because it's looking at stock and
how customers use stock, so it's at that level.
MR. SHEPHERD: And the IESO number is at the other end
of the process and so the difference, 8.3 percent, you have
attributed to line losses?
MS. BUJA-BIJUNAS: It's a combination of a few items,
primarily line losses. That's the primary difference.
However, there are a few other smaller differences. CIMS
does not address, at least not for the analysis that was
done here, does not address agriculture so you still have a
bit of energy related to agriculture. It does not address
transportation. So there still a bit of energy in
transportation.
MR. SHEPHERD: Can I stop you for a second. CIMS has a
transportation module. Did you choose not to use it?
MS. BUJA-BIJUNAS: The version of CIMS that was run for
the national study and run for us did not have
transportation.
MR. SHEPHERD: I am just looking at the chart. The
energy demand model says it has modules for residential,
commercial, industry and transportation. Is that right?
MS. BUJA-BIJUNAS: The analysis that was done for us
addressed the major consumption areas of residential,
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commercial and industrial.
Agriculture currently uses about 2.3 terawatt-hours of
the 155, just as transportation uses about 0.7 terawatt-
hours of 155. And so I think the direction that was taken
was to account for the major users and just use an
adjustment factor that included T and D losses along with
the percentage for agriculture and transportation.
MR. SHEPHERD: Does that 8.3 percent include a weather,
a variation for weather or is weather consistent between the
IESO number and the model number?
MS. BUJA-BIJUNAS: What we do is when we compare or
when we calibrate the results, it is calibrated to the IESO
weather-corrected actual.
So our forecast starts on a weather-corrected basis,
and is forecast out into the future on a weather-normal
basis.
MR. SHEPHERD: You are jumping ahead of me. I am still
at 2005. The 143.1 number is already weather-corrected;
correct?
MS. BUJA-BIJUNAS: The analysis done at the consumer
level, because all of the information comes from -- not all
-- a majority of the information comes from NRCan, sources
like that. These sources do not do a weather correction.
So all of that information is not weather corrected.
Ultimately, when those results are calibrated, along
with T and D losses -- and along with line losses, et cetera
-- we try to have it equal the IESO weather- corrected
value.
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MR. SHEPHERD: So the answer to my question, then, is
that that 8.3 percent also adjusts for weather? Is that
right?
MS. BUJA-BIJUNAS: To a small extent. One thing I want
to stress is that the weather correction is certainly a lot
stronger an issue when you look at peak than when you look
at energy.
MR. SHEPHERD: I am going to come to that, yes.
MS. BUJA-BIJUNAS: So consequently, if you did not
weather-correct the energy, you wouldn't really see that
much of a difference as you would if you didn't weather-
correct for the peak analysis.
MR. SHEPHERD: Okay. Now, the CIMS model, the output
is terawatt-hours, it is energy demand; right?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: It doesn't have any peak or load shape
information in it.
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: So then you had to, and you have an
exhibit where you talk about this, you had to convert the
CIMS data into peak demand data?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: And the reason for that is because when
you're doing capacity planning you need to know how much to
build.
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: Okay. And so I am looking at Exhibit D,
tab 1, schedule 1, attachment 1, and this is your
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methodology for doing that; right?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: So I just want to ask you a couple of
questions about this. There were some things I didn't quite
understand.
You started by saying, We don't have good load profile
data for Ontario, but we can go to this company, Itron, in
the United States that has very sophisticated load profile
data by end use for Michigan and New York, and we can buy it
from them, right, and you did?
MS. BUJA-BIJUNAS: That was our starting point.
MR. SHEPHERD: Okay. And did you test those load
shapes to the Hydro One load shapes we already had available
to see whether they matched?
MS. BUJA-BIJUNAS: First of all, you couldn't really
compare the load shapes from Itron to Hydro One's load
shapes.
Hydro One did not go down to the same level of end uses
as we were going down to. So where we could compare was at
a more aggregate level; namely, we compared the residential,
the commercial and the industrial sector results.
For example, Hydro One does not have a profile for
dishwashers or refrigerators or any of the appliances. In
the CIMS analysis, you do have those appliances.
So we had to search out other load shapes for those
things that weren't covered by Hydro One.
So what we tried to do was we started off with the
Itron load shapes from jurisdictions that were relatively
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similar to Ontario; namely, places like Michigan or New
York. We used those as a starting point, and then we wanted
to check -- do our results, make some sort of inherent
sense.
So then we went to Hydro One, who at that point was in
the process of analyzing LDC information, and they provided
for us the profile of residential use, commercial and
industrial, on an hourly basis, and we were able to compare
our residential, commercial and industrial to look for
consistency to do a sanity check between the two.
MR. SHEPHERD: This is the combined load shape for
residential, not the end use by end use load shape?
MS. BUJA-BIJUNAS: Not the end use by end use. For
example, for the commercial sector, they don't do end uses
-- for the industrial sector, they don't do end uses.
So we did the commercial total, the industrial total,
and for residential, for example, they put together all of
their appliances as one end use as opposed to disaggregating
the end uses.
MR. SHEPHERD: Now, they actually have some specific
load profiles for end uses that you had Itron load profiles
for; right? Did you compare those ones head to head?
MS. BUJA-BIJUNAS: That would be --
MR. SHEPHERD: For example, lighting.
MS. BUJA-BIJUNAS: I am having difficulty remembering,
but we compared a couple of the end uses where there was
similarity. We concentrated more on the residential as a
total, commercial and industrial as a total.
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MR. SHEPHERD: All right. So if I understand what you
are saying, then, intuitively you thought that Michigan and
New York would be a good mix to proxy Ontario, and then you
tested it by going, at the best level you could, to the
Ontario data you had to see whether at least what you could
match did match?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: The answer is it did match?
MS. BUJA-BIJUNAS: It's relatively similar, yes. I say
"relatively similar" for the following reason. Hydro One
weather-corrects their information somewhat differently than
the way IESO weather-corrects. The logic is the same logic,
but ultimately you weather-correct either to minimize risk
for capacity planning or to minimize risk for revenue
collection, or whatever it is.
Hydro One's risk criterion is different than the
IESO's.
MR. SHEPHERD: It's revenue driven as opposed to --
MS. BUJA-BIJUNAS: That's exactly right. So we're not
going to have the same profiles, but ultimately you check to
see is your load forecast in the same vicinity. Do you have
similar characteristics? Are things explainable?
So from that perspective, we compared it, although on
an hourly-by-hourly basis it wouldn't be the same.
Hydro One, their peak in their analysis can occur on a
weekend. The IESO makes sure that the peak does not occur
on the weekend.
So there are some differences in the profiling.
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MR. SHEPHERD: Well, and those differences, in fact,
are material; right? You explained them. You understand
why they exist, but in fact the Hydro One load shapes don't
look at all like the Itron ones, do they? They're quite
different?
MS. BUJA-BIJUNAS: I wouldn't actually say they're
quite different.
MR. SHEPHERD: Okay. In this D-1-1, attachment 1, you
refer to the Itron load profiles, and you say, By the way,
we can't show them to you.
Have you filed them somewhere in this proceeding? You
say at page 2, as to the Itron load profiles, they're
proprietary, so we can't show them to you.
MS. BUJA-BIJUNAS: Oh, well, when we procured the
Itron, we paid -- the Itron load shapes, we purchased them
from Itron and it's their load shapes. So we did the work
with -- it's like purchasing software.
So -- but what -- so, as I said -- and we used that as
the starting point of our analysis. So it is like getting a
Lego set. You start with something, and then you keep
iterating. You keep adding intelligence as you obtain
intelligence. If there's something else to check against,
we checked against the old Ontario Hydro profiles, which are
on the IESO website.
MR. SHEPHERD: This is the ones from way back?
MS. BUJA-BIJUNAS: Oh, yes, exactly. But at least it
is Ontario data. We checked against the DOE. They do some
modelling. They have some profiles. Certainly some
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profiles will not be the same, but things like lighting you
sort of imagine would have a similarity.
MR. SHEPHERD: I assume that you didn't just imagine.
You checked.
MS. BUJA-BIJUNAS: That's right. So in some things,
you make -- it's kind of a judgment call. You make some
changes in certain locations in the profile. You are
comfortable with some; not others. You talk to people at
the IESO or you talk to other people who are familiar with
the market. Do you expect this load factor to be the
following for this end use, or if people are familiar with
what the profile should be for a given industry, how do you
feel about this profile?
So it kind of just develops with time. You make
changes to it.
MR. SHEPHERD: Let me come back to my question on this
point.
You started with they're -- the whole basis of your
capacity forecast is the Itron load profiles?
MS. BUJA-BIJUNAS: That was the starting point.
MR. SHEPHERD: And you have declined to let this Board
see them; that's correct?
MS. BUJA-BIJUNAS: I am not sure what the benefit would
be to see the Itron load shapes, given that we did a number
of changes and adjustments, et cetera, after the fact.
So it is like giving -- I mean, it's like giving
somebody a set of Lego sets, Lego bricks.
MR. SHEPHERD: All right. So then you -- what I am
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concerned with is the -- your load forecast becomes a black
box if we can't see how you calculated it; right? However,
let's leave that aside for a second and go on to the next
point, which is you didn't actually use the Itron profiles
as they were.
You did two things to them; right? You normalized
them, and then you adjusted them. So tell us what those two
things were.
MS. BUJA-BIJUNAS: A load profile, the height or the
magnitude of it is determined by the energy for the end use.
So you have to normalize the profile so that you can
then -- that's your starting point. It is almost like it
has energy of one. Different jurisdictions who used that
end use at a different amount will have a different area
under the curve, a different amount of energy. So that's
what normalization means. You have to start with that
equalling one, and then you take the end use energy from
CIMS, apply that as the area under the curve, and that will
give the weighting of that end use.
MR. SHEPHERD: It doesn't change the shape. It just
changes the amplitude of the curve?
MS. BUJA-BIJUNAS: That's right. It's an amplitude
adjustment; that's right.
MR. SHEPHERD: The reason for that could be because of
different weather, and that's where you catch weather;
right?
MS. BUJA-BIJUNAS: Actually, they're weather-normal.
MR. SHEPHERD: No, but they're weather-normal for the
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jurisdiction, so if the weather is different here as in New
York, that would be captured in an amplitude difference; is
that right?
MS. BUJA-BIJUNAS: The curves as obtained are supposed
to be weather-normalized to take out the impact of weather.
MR. SHEPHERD: Okay. So you would have the same curve
in Florida that you would have in Ontario.
MS. BUJA-BIJUNAS: No. That's why you choose places
like New York and Michigan. Navigant Consultants did this
work for us and they sort of perused the areas where you can
get Itron load shapes and tried to find areas that had, you
know, economies and weather similar to us, that it had real
winters, that had real summers. Similar to what you would
have in Ontario as opposed to Arizona or someplace that has
a very different one.
The other adjustment you mentioned is adjusting for
differences in things like stat holidays in Ontario compared
to the United States.
MR. SHEPHERD: Okay. So when this -- your evidence
talks about, this adjustment being to "better reflect
Ontario patterns of electricity use" that's not because our
behavioural patterns are different, that's because we have
different holidays, for example.
MS. BUJA-BIJUNAS: Yes. When you get the profiles from
Itron, they're American, in terms of they have whatever
American stat holidays are in there as opposed to Canadian
stat holidays. So you can be off in your...
MR. SHEPHERD: What I am saying is this adjustment
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doesn't include things like, we like dishwashers more than
people in Michigan do.
MS. BUJA-BIJUNAS: If you use normalized profiles, so
that the area underneath is one, and if in Michigan you have
a lot more energy going to dishwashing, then they would have
a higher adjusted profile than we do, but the similarity
would be: If you assume people wash their dishes as 8
o'clock at night, you would have the same profile, people
wash their dishes as 8 o'clock at night. It is just how
much energy goes into it would be different.
MR. SHEPHERD: If I can simplify these two adjustments
then the normalization is an amplitude adjustment.
The second adjustment that Navigant did is actually a
shape adjustment; is that right? So, for example, you're
going to have more load on Columbus Day and less on Victoria
Day.
MS. BUJA-BIJUNAS: That's true, that's true, yes.
MR. SHEPHERD: Right, okay.
Then -- now, after those adjustments you have a set of
load profiles. Have you filed those in this evidence?
MS. BUJA-BIJUNAS: What we filed was our peak and our
energy values by end use whereupon you can then get your
load factors for each end use.
MR. SHEPHERD: So you didn't file your load shapes?
MS. BUJA-BIJUNAS: I am trying to remember. I don't
think so. I don't think so.
MR. SHEPHERD: Okay. Now, then once you had this set
of adjusted load shapes, you then used what you referred to
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in the evidence as the delta approach to build your end-use
capacity forecast; right? The peak demand forecast.
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: And this is to counter the sum of the
parts problem in the analysis where the sum of the parts
won't necessarily add up to the total. It is a forest and
trees issue; right?
MS. BUJA-BIJUNAS: That's correct, yes.
MR. SHEPHERD: So to deal with that what you do is take
a base profile of the system as a whole, the overall system
load shape, and then you say, okay, now we know it is made
up of all of those things so if we adjust this component
part, that will adjust the total by this much, right, and
the shape?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: Okay. And so, for example, if something
like central air-conditioning load increases over time, you
will adjust the system profile, the base system profile for
those specific changes to central air-conditioning load
which may not have the same shape as the overall system
load.
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: All right. So the adjustment isn't just
an amplitude adjustment, it is also a shape adjustment?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: Now, to do that, you start with the 2005
IESO system profile?
MS. BUJA-BIJUNAS: That's correct.
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MR. SHEPHERD: And you will agree with me that the
choice of the base system profile is critical, because, in
effect, you're saying that that base profile is the paradigm
for the next 20 years; right?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: So how did you choose 2005?
MS. BUJA-BIJUNAS: Basically it was a case of -- that
was the latest year that was available. We went to the IESO
and asked them if they felt 2005 would be a reasonable
representative year, and basically they said it would be
fine.
They cautioned us not to use a year like 2003, for
example, which had things like the blackout and had numerous
strikes and it had all sort of other issues where they felt
the profile was not a representative profile, and so we
chose 2005.
MR. SHEPHERD: Now, you didn't do any analysis to
determine whether 2005 was, in fact, an appropriate
paradigm; right? You didn't look at an average of a series
of years and say, this looks like this at the mean?
MS. BUJA-BIJUNAS: No. We just -- there was no
indication given to us that 2005 was an outlier year, so we
just used 2005.
MR. SHEPHERD: What I am asking is, what investigation
did you do to see whether it was an outlier year, aside from
asking the IESO, What do you think?
MS. BUJA-BIJUNAS: All we did we asked the IESO if this
was an appropriate year to choose.
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MR. SHEPHERD: Now, when you're doing that, when you
are trying to create a paradigm, the other way you can do
this and people do this in the delta approach, right is they
create a composite year, it's made up of inputs from more
than one year. That's quite common, isn't it?
MS. BUJA-BIJUNAS: I can't answer to whether or not
that is common. I don't know. I guess it would be an
approach, but I don't know.
MR. SHEPHERD: Okay.
You will agree that if 2005 was an atypical year, then
your load forecast would be pretty fundamentally flawed?
MS. BUJA-BIJUNAS: I don't know how to answer the
question it is fundamentally flawed, because I don't know
how much of an impact that would be. There are a number of
things that affect a load forecast. There are a number of
other factors which, quite frankly, might outweigh how
different that is. So I cannot, in an absolute sense, say
that would be the Achilles heel of the entire analysis.
MR. SHEPHERD: Let me put it to you in perhaps a less
charged way.
If you had, by accident, used 2003, you would agree
that you wouldn't really want to rely on that load forecast.
MS. BUJA-BIJUNAS: In actual fact, at one point, we did
start looking at 2003. And we found because of the blackout
and strikes that it was a very difficult year to use and it
was at that point that we were told 2005 would be a better
alternative and so that's why we returned to it.
MR. SHEPHERD: Good. Now the other key result of using
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a delta approach is that your 20-year forecast is, starts
with an assumption that the end uses in that year will be
the same end uses for the next 20 years; right? They may
evolve, but what we use electricity for in 2027 is going to
be same as in 2005?
MS. BUJA-BIJUNAS: Well, the delta approach – it's
actually not the delta approach. It's the, what you use to
do your end-use forecasting. Because ultimately what you
add on to your profile is whatever end uses that you
analyze, which is what you analyze on the energy end of
things.
MR. SHEPHERD: In the CIMS model?
MS. BUJA-BIJUNAS: That's right. So, you know, the
delta approach is the translation by end use into, you know,
the A 760 hours of the year. But it translates what
analysis you have as an energy analysis.
So if those end uses are the same in your energy
analysis, they will be the end uses that you apply to the
other analysis.
MR. SHEPHERD: And in fact, the way you did it, the
CIMS model didn't provide you with any new end uses that
aren't -- that didn't exist in 2005; right? Electric cars,
for example.
MR. BATAILLE: Can you repeat the question, please.
MR. SHEPHERD: Yes. The output from CIMS doesn't make
any assumptions over the next 20 years that there will be
new electricity end uses having a material impact. True?
MR. BATAILLE: In certain components of the model --
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sorry, speaking specifically to residential and plug-load,
there is some assumption, there is quite a strong trend to
there being new plug-mode appliances and there's questions
of how fast or efficiency of the existing appliances is
increasing and how fast the efficiency of new appliances
will increase, but there is some assumption that things will
come along that we don't know about such as personal
computers at home. But it is looking at past trends, trying
to make some prediction of how that might occur.
MR. SHEPHERD: So you don't have any assumptions in the
model as to paradigm shifts in energy use?
MR. BATAILLE: No. Because of the model is a short to
medium term specifically, especially for this analysis of
defining that, there is some weight to the energy system as
it is carrying forward, and you are not going to see too
large a change within the forecast horizon.
MR. SHEPHERD: Short to medium includes 20 years, I
assume?
MR. BATAILLE: Yes.
MR. SHEPHERD: That sounds pretty long term to me, but
maybe for a modeller it is not.
You will agree, won't you, that there are new loads
that we can identify right now that have a reasonable
likelihood of happening that could have a material impact on
your load forecast, will you agree with that, like electric
cars, for example?
MS. BUJA-BIJUNAS: Certain technologies, like electric
vehicles, we're monitoring. We recognize they could have
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quite a significant impact on the load.
We also recognize there's certain technologies that can
decrease load, also. So we recognize there are some
technologies that have not been incorporated in the load
forecast, and some will increase it, like electric vehicles,
and some can decrease it, also.
MR. SHEPHERD: Well, in the case of some of those
technologies, at least - and I will again pick on electric
vehicles, but there's lots - they in fact may increase your
energy side, but not your peak demand side; right? In fact,
they may flatten your load shape.
MS. BUJA-BIJUNAS: Electric vehicles, if they are
charged overnight and use those eight hours to do their
recharging, that would not add to your peak. It would add
to your base load.
If the paradigm for electric vehicles is to have real-
time charging, as some jurisdictions are considering in the
States, that would change the picture. But a lot depends on
what your battery technology is and what your range is, and
that's really evolving a great deal right now.
MR. SHEPHERD: One of the things you're doing on the
conservation side is to move load from peak to off peak;
right? That's one of your strategies?
MS. BUJA-BIJUNAS: That's load shifting; correct.
MR. SHEPHERD: Because it is cheaper to run the system.
The overall cost of the system is cheaper if the flatten the
load shape; right?
MS. BUJA-BIJUNAS: That's correct.
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MR. SHEPHERD: And the other way you can do is you can
add load off peak, and that also flatten the load shape?
MS. BUJA-BIJUNAS: That would flatten the load shape.
MR. SHEPHERD: Okay. In your forecasting, you haven't
assumed any significant changes in that, have you?
MS. BUJA-BIJUNAS: We haven't assumed things like
electric vehicles or anything like that, no.
MR. SHEPHERD: The other part of this particular subset
is the question of -- you talked about the impact of price
changes on the CIMS model, but that is an energy impact.
Price changes can also affect wind energy as used;
right? We have imminently time of use pricing in smart
meters. Presumably that will shift load; right? How have
you modelled that in this?
MS. BUJA-BIJUNAS: That's actually in the CDM analysis,
and in the CDM analysis, which will be discussed in the
panel on CDM, we do incorporate an assessment for the impact
of smart meters for mass market DR programs and for business
market DR programs, all of them to shift load off peak.
MR. SHEPHERD: Okay. But I am not asking about
programs now. I am talking about the price response, the
-- sorry, the demand response associated with price changes.
Your model has assumptions about price changes, and I
am asking: How do you model the change in load shape that
results from price changes?
MS. BUJA-BIJUNAS: Again, what we did, for example, for
DR programs or for smart meter programs, for that matter,
what we did was that we had -- for example, say you're doing
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smart meters. This is the work Navigant did for us.
You have, say, the residential profile. You have
elasticities. They're not own price elasticities. They're
not those elasticities, but they're elasticities that
represent load shifting.
So they use those elasticities and the roughly three-
to-one price schedule to then determine what the profile
difference is going to be, and that is incorporated in the
CDM numbers.
So the CDM profile that we use does have profile
changes brought about by load shifting, and that new
profile, which has shifting in it, is subtracted from the
reference forecast to then give you the net demand.
So that sort of shifting is incorporated in the net
demand profile that's used.
MR. SHEPHERD: Okay. I am not actually asking about
either shifting or programs. I am asking about -- let me
back up a stage. Maybe I didn't ask the setup question that
we're into.
The plan and the forecast are iterative; right? If the
plan produces higher costs -- produces higher cost
electricity, that will change your forecast; right?
MS. BUJA-BIJUNAS: We actually did not do it in an
iterative fashion. The prices that were used for the
reference forecast were the ones that were used in the
national study that underlie the CIMS forecast.
So that was used to produce the reference forecast, and
that was also then used to produce the conservation
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potential forecast. Another set of runs afterwards was not
done.
MR. SHEPHERD: Natural conservation is supposed to be
in the load forecast; right?
MS. BUJA-BIJUNAS: It is.
MR. SHEPHERD: There is more natural conservation if
prices are higher; right?
MS. BUJA-BIJUNAS: That would be true.
MR. SHEPHERD: That's own price elasticity?
MS. BUJA-BIJUNAS: That's right.
MR. SHEPHERD: And so don't you need to know what the
cost is of the plan in order to determine how much you're
going to need, because it's going to affect your load;
right?
MS. BUJA-BIJUNAS: Yes. In one of the exhibits, in
D-1-1, which is Exhibit -- bear with me a minute. It's D-1-
1, page 24, figure 16.
In that figure, there are five curves. What we're
talking about right now, it is load 4 curves that we're
looking at. The yellow curve is the price assumptions that
underlie the CIMS analysis, that underlie the reference
forecast that was produced for us.
And the other three curves are cost to customer, so
they are the prices that come out from the plan.
What you will notice is that from roughly 2015 onward,
the price assumptions for the IPSP reference forecast is
contained within the band of cost to customer prices.
There is a deviation in the near term between the
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prices used in CIMS and the prices that come out of the
plan. The deviation is about 15 percent, or so.
Now, when you look at that, you could say, Well, the
prices used in CIMS are higher than the prices in cost to
customer. And so if the prices are higher, then you would
say, by using the lower prices, the forecast should then
have been higher than it actually was.
Well, I guess fortuitously, or whichever way you want
to look at it, I guess in the near term the economy has
certainly decreased so that if you were to take an
elasticity and apply that price difference, you would say
the forecast should be so many terawatt-hours higher.
At the same time, since all of this work was done, the
economy in the near term has gone down, and that would
dampen the forecast.
So you have one factor that would say this would
indicate a need for a higher forecast. In an economy that
has gone down, that would dampen it in the other direction.
So in the near term, there is a gap in the prices, in
the -- after 2015, there is no gap in the prices.
So I will say, yes, in the near term there is a price
difference between the planned prices and the CIMS prices,
but also in the near term. I think the current
circumstances are such that I think it would dampen any
increase in load.
MR. SHEPHERD: I was going to get to this later but I
will ask you now. Have you, in light of what has happened
over the last six months, have you updated your load
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forecast data?
MS. BUJA-BIJUNAS: I have a very long answer for that.
MR. SHEPHERD: That's fine.
MS. BUJA-BIJUNAS: Okay. Just bear with me.
MR. SHEPHERD: You can just give us a spreadsheet, if
you want.
MS. BUJA-BIJUNAS: I'm not that sophisticated. It came
through in the presentations that took place the first day
of this hearing.
What came through was that the 2006 and 2007 values as
measured by the IESO are significantly lower than the
reference forecast.
MR. SHEPHERD: Yes.
MS. BUJA-BIJUNAS: And there was a chart that we gave
in that presentation and you could see those two data
points. Oh, I think it's chart -- on page 50, is it 50?
MS. LEA: Yes, slide 50.
MS. NOWINA: Slide 50 of Exhibit K1.1.
MS. BUJA-BIJUNAS: There you go, okay. That's it.
So the two dots, the purple dots on the bottom, are the
actuals, the weather-corrected actuals from the IESO.
And the black line is the reference forecast. And the
red or orange triangles are the net of CDM numbers.
So if I look at for example 2007, the gap between the
reference forecast and the IESO actual is about 1,400
megawatts. Okay.
Now, that gap arises from two things, which is: How
much are we off on the reference forecast? And how much do
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we actually accomplish, in terms of CDM? Because what you
actually measure out there is the demand in a world where
there's conservation out there.
So you will never really measure reference forecast
again because your world has been changed, there is
conservation out there. IESO measures the net amount.
So that's the figure that's 1,400 megawatts, less than
our reference forecast.
So from that, if you want to sort of account for what
happened, you have to make some assumptions. A starting
point is, well, do we know anything regarding what happened
to conservation, because that certainly is part of the
equation. And at this point, we don't have a finalized
answer for how much conservation took place in 2007.
The CICA report from Peter Love lists about 600
megawatts, and the 600 megawatts are basically contracted
megawatts. They may not necessarily fall exactly on peak.
They may not necessarily give you the whole 600.
MR. SHEPHERD: They're not fully measured and
evaluated.
MS. BUJA-BIJUNAS: That's right, they're not fully
measured and evaluated and the OPA relies heavily on fully
vetting exactly what happened.
And so if we assume 400 megawatts of that actually
occurred as OPA-sponsored programs, you compare that to our
assumptions in the IPSP, and our assumption for 2007 is that
that sort of filled in area under the curve is 755
megawatts. Okay.
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It's 400 that looks like it will come up from the EMV
process, but it's not finalized yet, but that's for the OPA
efforts. There is also recognized efforts that are not OPA-
sponsored efforts. There is other influenced. And that
leaves around 300 or so for other influence, which we feel
probably is a good assumption.
So if, as a starting point to this exercise, if you
assume that we meet the 755 megawatts of conservation for
2007, if you make that assumption, then there is a 1,400
megawatt gap.
You assume the 755 is there for conservation. That
leaves, then, your reference forecast being high by about
700 megawatts. Okay. Again, this is very -- conjecture on
my part, but that is where you would lead this thought
process.
Now, the next step ends up being, okay, if your
reference forecast is 700, if the actual coming in is 700
lower than your reference forecast, what happened?
Again, a lot of the data is not there. The very
detailed data you need to do that, industry by industry, all
of those fine detail is available from NRCan.
Unfortunately, their last year is 2005, meaning they're
about two years, usually, and trying to catch up so you
can't get all of the detail you want.
So we went to the IESO. They don't have the
disaggregate information that we need. Like they don't have
all of the detail you want to be able to at an end-use level
come to a really complete solution.
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However, I think there's no denying that there are
certain industries in this province that have been suffering
quite significantly over this period. And from what we
could get from the IESO, there has been enough downturn in
the industrial sector to account for a large portion of that
700 megawatts.
So I think it is a feasible scenario to say that that
difference could come about from 755 megawatts of
conservation and a downturn in our industrial sector, in
particular pulp and paper. That can account for the other
difference of why there is such a difference between the
measured and what we planned on for 2007.
MR. SHEPHERD: So you are right, that was a long
answer.
MS. BUJA-BIJUNAS: I'm sorry. There are many parts to
this.
MR. SHEPHERD: That's okay, I asked for it.
As a forecaster -- first of all, my actual question was
and I will come back to my actual question, which is: Have
you done a new forecast?
MS. BUJA-BIJUNAS: Oh, okay. Well, there's a part B to
this then.
MR. SHEPHERD: Give me the yes/no answer, first.
MS. BUJA-BIJUNAS: No.
MR. SHEPHERD: Thank you. And then --
MS. NOWINA: You can give an explanation if you want.
MR. SHEPHERD: You can explain too.
MS. BUJA-BIJUNAS: I was always told to be direct so
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not doing a long explanation -- I have to be direct now.
We did not do a detailed subsequent forecast, in terms
of running CIMS again or doing that detailed analysis.
What we did do was we did, again, very top-level
thought processes, if you want to call it that.
When we looked at 2007 and the IESO information, which
said pulp and paper has been hurting quite a bit, the auto
industry has been hurting quite a bit, the chemical industry
has been hurting quite a bit, what we did was that we then
posited what might happen to these industries in the future.
MR. SHEPHERD: This is a scenario analysis as opposed
to a --
MS. BUJA-BIJUNAS: Yes, yes. And we said, okay, what
if this decreased load doesn't revive? It stays that way
for these industries out into the future, to the end of the
forecast.
MR. SHEPHERD: That's the key thing in long-term
forecasting, right, is you have to assess whether a short
term impact is going to continue, or whether it is just --
MS. BUJA-BIJUNAS: That's exactly right. That's
exactly right. So we're just talking here about these
industries and what might happen to them.
You mentioned earlier there is other factors, electric
vehicles, there is other factors that might bring it down.
There is many different things that create many different
scenarios. So at this point we're just saying, okay, what
about the issue of the manufacturing sector? How would that
affect load in the future?
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Again, it is just scenarios. If they stayed at the
current level for the next 20 years, if they didn't revive.
What if they revived halfway up to what we thought was going
to be the case for them in the 20 years? Or what if they do
resume what we thought they would get up to, but it might be
ten years out so they have a slow ramp back up to where they
were before?
What we found that in most of these scenarios that the
low band that we posited covers that eventuality in the mid-
term. It doesn't cover it in the very, very short term. We
can see in the graph it doesn't, and a lot of it is because
bands get wider with time. They're not wide in the very
first year.
So our bands don't capture that in the short term.
They are okay in the mid-term.
The supply case, which is the load demand case, is a
bit higher than this -- these scenarios after 2020.
So once you get further out, then, again, just using
the scenario of lower industrial demand, if it continued on
from what's happening now, that's a big assumption. If you
assumed it's continuing on from what's happening now, in the
long run, then they would be within the band, except for
when you get to about 2020.
But as I said, the issue there is you're now looking at
one variable, which is the manufacturing sector. What's the
other variable? What if things like off-carbon technologies
cause the load to go up? That's the other variable. That
also adds to uncertainty.
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So you've got uncertainty in your manufacturing sector,
uncertainty in your economy, uncertainty in new
technologies, some which will push up and some which will
push down, and that's what I meant in my initial
presentation. This is really a time of really, really great
uncertainty.
MR. SHEPHERD: Okay. Thank you. Madam Chair, a time
check. I am just on my 60 minutes. I have about ten
minutes left, if that is okay with the Board.
MS. NOWINA: I say you have six minutes left. I might
give you the extra four, Mr. Shepherd.
MR. SHEPHERD: Thank you. I am trying. My last set of
questions is with respect to disaggregation of your
forecast. I provided you and others with a spreadsheet.
The OPA witnesses will find that I like to use spreadsheets,
for some reason that's back in my distant past. This is
entitled "Comparison of 20-Year Percentage Increases In
Reference Forecast".
Do you have that?
MS. BUJA-BIJUNAS: Yes, we do.
MR. SHEPHERD: Does the Panel have that?
MS. NOWINA: No.
MR. RICHMOND: No, the Panel does not have that, Mr.
Shepherd. Perhaps we could call that Exhibit K6.1. You
have characterized it as?
MR. SHEPHERD: "Comparison of 20-Year Percentage
Increases In Reference Forecast".
EXHIBIT NO. K6.1: DOCUMENT ENTITLED, "COMPARISON OF
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20-YEAR PERCENTAGE INCREASES IN REFERENCE FORECAST"
MR. SHEPHERD: Now, we provided you with the Excel
version of this. Have you had a chance to verify that your
data has been correctly replicated in this chart and that
the percentages are calculated correctly?
MS. BUJA-BIJUNAS: I have to admit, we got these sheets
at lunchtime and we haven't had a chance to go through all
of the data.
MR. SHEPHERD: You were not provided with the Excel
spreadsheet? We sent it yesterday and asked that it be
provided to you.
MS. BUJA-BIJUNAS: Actually, we just got it at
lunchtime.
MR. SHEPHERD: Oh, okay. So I wonder if you will
accept, subject to check --
MS. BUJA-BIJUNAS: That's fine. Subject to check,
that's fine.
MR. SHEPHERD: You understand what we did we took your
forecast data in Exhibit D, tab 1, schedule 1, attachment 2,
pages 3 to 8, and we just calculated percentages and totals
from it. Do you understand that?
And so it has two sections. The top part, which is the
end use sectoral detail, it has the coincident peak demand
for 2007 and 2027, and then on the right-hand side it has
the energy demand for those same periods with percentages.
Do you see that?
MS. BUJA-BIJUNAS: Yes.
MR. SHEPHERD: Now, the energy figures here, if we just
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look at the right-hand side, the energy demand side, these
are the energy figures you got from CIMS which you then
increased by 8.3 percent?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: And so would you agree that applying
that 8.3 percent to all of the figures is a shortcut,
because it's unlikely that it actually -- they actually all
adjust by 8.3 percent?
MS. BUJA-BIJUNAS: Yes, that is true.
MR. SHEPHERD: Okay. But you don't have more detailed
information on what the correct adjustment would be for
individual end uses? You have no way of determining that?
MS. BUJA-BIJUNAS: No. We consider it. The industrial
sector, for example, part of the industrial sector is made
up of large industrials, for example. They might just see
transmission losses as appropriate but not distribution
losses. Residential sector would potentially -- some of it
might have more of a distribution loss.
So it would vary, but we just applied the same
correction factor right across. So it's the same -- uniform
correction factor.
MR. SHEPHERD: So that's the right-hand six columns.
Then the left-hand six columns there, those are the numbers
you got by converting the CIMS data using this delta
approach with the load shapes to peak demand data; right?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: Okay. So I just want to ask a couple of
questions about this. Let's start with the residential
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section.
So if I read your data correctly, what you are
forecasting is that residential peak demand will go up by
about 25 percent over the course of the next 20 years, but
residential energy use will go up by 18 percent over that
period. Does that sound right to you?
MS. BUJA-BIJUNAS: That's correct.
MR. SHEPHERD: So doesn't that mean that the
residential load profile is going to alter over that period?
There will be a significant shift from off peak to peak?
Isn't that the effect of that data?
MS. BUJA-BIJUNAS: What that is signifying is that
those end uses that have a different peak-to-energy ratio,
that are peak year, are growing or contributing more in the
long run.
So, for example, end uses like air-conditioning, which
are quite peaky, if they figure more and more prominently,
they will result in a faster peak demand growth as opposed
to an energy growth.
MR. SHEPHERD: Well, it's interesting you say that,
because I am looking at the central air-conditioning line,
and it says the peak demand for central air-conditioning
will go up about 26 percent, but the energy will only go up
22-1/2 percent. That tells me - tell me whether I am
wrong - that the -- what you are anticipating is that people
will use their air-conditioners more in the daytime than
they do now?
MS. BUJA-BIJUNAS: No. Actually, if you -- how do I
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describe this? Okay. Suppose the current load profile for
the province was totally flat, okay, and it had only one
bump, the one air-conditioner that there is in the province,
and that was the only bump you had in your entire profile.
If you got two new air-conditioners in your entire --
for your entire forecast, those two bumps will -- it could
have the exact same profile, but you're having this peaky
profile add more to your overall profile.
MR. SHEPHERD: I am not asking you about --
MS. BUJA-BIJUNAS: So I am not assuming any load
shifting. I am just incorporating profiles, some which are
peakier than others, which will result in different peak
growth.
MR. SHEPHERD: That's not what I'm asking you, though.
I'm not asking you about how you compared the central air-
conditioner line to the residential line. You're right,
that's the result.
I am asking you, if you look at the central air-
conditioning line, you're saying that the peak demand for
central air-conditioning will grow faster than the energy
use for central air-conditioning.
MR. ADELAAR: One of the reasons you see that
phenomenon is you are getting a greater saturation or
penetration in the marketplace of central air-conditioning,
and that load is spread over both potentially over peak and
shoulder season. So the energy is potentially spread over a
longer period than -- so you will have a disproportionate
effect on peak, on summer peak, as you increase saturation
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of that central --
MR. SHEPHERD: So I still don't understand the math
there, I'm sorry. Help me out with this.
If you have -- whether you have one air-conditioner or
a million air-conditioners, if they all have the same load
shape, right -- if they all have the same load shape, then
the increase in capacity from one number to the other number
and the increase in energy are going to be identical, right,
in terms of percentage?
MR. ADELAAR: First of all, they're not necessarily all
going to have exactly the same load shape, because it's a
function of the behaviour of the households.
MR. SHEPHERD: Well -- and so that is what I am trying
to drive at. What is the assumption you made that caused
the energy in the demand -- the energy in the peak to move
at a different rate, because all other things being equal,
if we use air-conditioners the same as we use them today,
then we could have more air-conditioning, but the
relationship between the two should be the same; right?
MR. ADELAAR: I wouldn't suggest that based on our
analysis of central air-conditioning, electricity
intensities, that the relationship between energy and peak
will always be the same because of different patterns of
usage among households.
MR. SHEPHERD: So you are making an assumption that
over the next 20 years the pattern of usage is going to
change and we'll use air-conditioners more often during peak
than we do today?
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MR. ADELAAR: I wouldn't make that prediction. I would
defer that to my colleague.
MS. NOWINA: I am wondering, Mr. Shepherd, if it might
be more helpful to get an undertaking so the witnesses can
think about your basic question.
MR. SHEPHERD: I am going to have several of these, so
why don't I have a combined undertaking as I ask each one of
them, because there is like five or six of them.
MS. NOWINA: All right.
MR. SHEPHERD: Okay. So then let's move to another
line which is the miscellaneous line in residential. We are
still in residential but we're almost finished it.
In miscellaneous, the miscellaneous is home
entertainment and computers and things like that; right?
You have to speak.
MS. BUJA-BIJUNAS: Oh, yes.
MR. BATAILLE: Yes.
MR. SHEPHERD: And so naturally, you're expecting that
that is an area that's going to grow over time; right?
MR. BATAILLE: That's what the -- that's the trends we
see, yes.
MR. SHEPHERD: And you have also shown that the
increase in demand for that, sorry, I am using the old
terms.
The increase in peak for that is going to grow faster
than the increase for energy. I have the same question as I
had about air-conditioning: What's the behavioural pattern
change that produces that result? If you don't have an
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answer, I can wrap it up in the undertaking, okay.
The next area that I had a question about is, you have
assumed that commercial and institutional load shape will
stay roughly the same; right? The energy and demand will
grow at roughly the same rate? The amount of capacity and
the amount of energy you need is growing at roughly the same
rate?
MS. BUJA-BIJUNAS: I think so. Let me just check.
Roughly, yes.
MR. SHEPHERD: But if you go to industrial, again, you
are assuming that peak demand is going to grow faster than
energy use.
Do you know why that is? You have peak demand growing
at 31.6 percent and energy growing at 26.2 percent over the
20-year period.
MS. BUJA-BIJUNAS: It's the HVAC component that's
contributing to that.
MR. SHEPHERD: Okay.
MS. BUJA-BIJUNAS: Meaning, in an absolute sense, as
there is -– yes, as there is more HVAC and HVAC, for
example, is assumed to have more of a peakiness than machine
dry, for example, then that would lead to the difference in
peak growth versus energy growth.
MR. SHEPHERD: Okay. Let me cut to the chase here.
For your totals, you are expecting that peak demand
over the 20 years will grow by 28 percent, but energy demand
will grow by 25 percent.
Correct me if I'm wrong, but the effect of that is that
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you have to build more capacity than -- your capacity need
is higher than your energy growth as shown in CIMS; right?
MS. BUJA-BIJUNAS: The result we get is that over the
2007-2027 period, peak will grow at 0.1 percent more quickly
than energy.
So it grows a small percentage more than the energy
does.
MR. SHEPHERD: Okay. So what I am going to ask you to
do is, on these end use things, for the big changes -- I
have highlighted a couple of them -- can you give us an
undertaking to provide a brief explanation as to the changes
in energy -- in the electricity use that are driving those
changes in the growth of peak versus electricity?
MS. BUJA-BIJUNAS: Okay, okay.
MR. SHEPHERD: Can you do that?
MS. BUJA-BIJUNAS: Yes.
MS. LEA: Undertaking J6.2.
UNDERTAKING NO. J6.2: TO PROVIDE A BRIEF EXPLANATION
AS TO THE CHANGES IN THE ELECTRICITY USE THAT ARE
DRIVING CHANGES IN THE GROWTH OF PEAK VERSUS
ELECTRICITY
MR. VEGH: The way the -- I may regret this but the way
the interrogatory is expressed does leave a certain amount
of judgment, in terms of which particular ones will be we
will be addressing. I just want Mr. Shepherd --
MR. SHEPHERD: I will leave that to you.
MR. VEGH: You will leave that to us, thank you.
MR. SHEPHERD: Or to your witnesses, Mr. Vegh.
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MR. VEGH: The royal "us." You will leave it to the
OPA, thank you.
MS. NOWINA: Just to be clear. Your key concern, Mr.
Shepherd, was where peak demand was increasing but energy
demand was not increasing to the same -- at the same rate?
MR. SHEPHERD: That's right. The biggest disparities
are the ones I am concerned with. Obviously the ones that
have very small megawatt impacts even if the percentages are
different, I don't care.
So last is the regional reference forecast. I only
have a couple of questions on this.
You see the bottom section, it talks about the system
summer peak and the regional energy for the various regions.
This demonstrates that far and away the largest driver
of increased demand is the GTA area. That's more than half
your increase in demand; is that right?
MS. FRECKER: That is correct.
MR. SHEPHERD: That primarily flows out of the CIMS
model?
MS. FRECKER: The regional disaggregation of the
provincial forecast, which was provided to us by M.K.
Jaccard & Associates. The details of that disaggregation
methodology are given in D-4-1 --- rather, sorry, D-1-1 in
the same attachment as we have been discussing with respect
to the load profiles, and that disaggregation was carried
out by the OPA using an OPA methodology.
MR. SHEPHERD: Okay. So can you briefly tell us what
that methodology was.
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MS. FRECKER: Certainly. So the starting point was the
provincial forecast. And there were three main steps that
were involved in the regional disaggregation.
The first was disaggregating the province into
geographical zones which we have done to correspond to the
IESO electrical zones.
The second step was that we used proxy, economic,
demographic, and industrial data to disaggregate each of the
sectoral provincial forecasts. So for the residential
sector, we disaggregated the residential provincial forecast
on the basis of population, the population in those regions
existing and projected.
For the commercial provincial forecast, we
disaggregated that to the regions on the basis of an index
of commercial floor space and commercial employment.
For the industrial disaggregation of the provincial
forecast to the regions, we performed that disaggregation on
the bases of subsectoral industrial load growth patterns
that were identified in CIMS, and the disaggregation was
done on the basis of data that was provided to us in a
market scan done by Kinectrics which looked at the
industrial shares of industrial subsectoral load throughout
the province.
MR. SHEPHERD: Let me take the simplest of those to
make sure I understand it. Commercial floor space.
So what you did you said, okay, the CIMS model produces
X amount of load for commercial. And the total floor space
in the province is another number. So it's so much per
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square foot, and then you look at each of the regions and
say, okay, how many square feet do you have in each region?
MS. FRECKER: We didn't have commercial square footage
for each the regions. We did have a market scan that had an
indication of the commercial footage in the major regions.
MR. SHEPHERD: Conceptually though, that's correct?
MS. FRECKER: Conceptually, the proportion of regional
floor space was used to disaggregate the commercial forecast
as well as employment, commercial employment.
MR. SHEPHERD: I take it you agree that if the regional
forecasts are substantially different, for example, if the
northwest doesn't go down by 14 percent but instead goes up
by as much as the GTA, that results in substantial shifts
not only in where your generation is but also in what kind
of generation it would be; is that right?
MS. FRECKER: I think the particular implications of
demand being higher or lower than forecast on a regional
basis would probably be better addressed by our colleagues
on that side of the table.
MR. SHEPHERD: Mr. Stein or Mr. Gibbons, do you have a
brief answer to that, since I am over my time?
MR. GIBBONS: Could you repeat the question, please?
MR. SHEPHERD: The question is: If the regional load
is substantially different than what you projected - for
example, if the northwest has an increase instead of a
decrease - the effect of that is to change not only where
you put your generation, but also potentially what
generation you use; is that right?
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MR. GIBBONS: Potentially, yes.
MR. SHEPHERD: One other -- I have only one other
question, and that is the line for Bruce, I realize it's not
particularly material, but it's a big increase in peak.
I take it the reason for that is because you're
expecting new nuclear there and new nuclear has a load, as
well; is that right?
MS. FRECKER: I would have to check the particular
details of that for you.
MR. SHEPHERD: It was only curiosity. Those are all of
my questions. Thank you.
MS. NOWINA: Thank you, Mr. Shepherd. You were over by
about 17 percent of your allocated time.
MR. SHEPHERD: Can I pay it back later?
MS. NOWINA: Yes, you may, or you can get one of your
colleagues to pay it back and you can buy them a beer or
something like that.
MR. SHEPHERD: All right.
MR. DeROSE: For the right price, we could have a
proper trade in cross-examination time.
MS. NOWINA: Given where we are right now - it is 4:15
- I don't see a lot of point in starting with Mr. Buonaguro.
We will let him start fresh in the morning.
So we will conclude today and we will resume tomorrow
morning at 9 o'clock.
--- Whereupon hearing adjourned at 4:16 p.m.
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