D Barry Kirkham, QC"' James D Burns+ Jeffrey B Lightfoot~ Christopher P Weafer+ Michael P Vaughan Gary M Yaffe+ Jonathan L Williams_,_

Scott H Stephens" James W Zaitsoff Jocelyn :V1 Le Dressay

Carl J Pmes, Assooate Counsel+

Robin C Macfarlane+ Duncan J Manson+

Daniel W Burnett QC +

Ronald G Paton+ Gregory J Tucker+

Heather E Maconachte Michael F Robson+

Zachary J Ansley+ Pamela E Sheppard Katharina R Spatz!

Rose~ Mary L Basham, QC, Associate Counsel+ f!on Waller SOwen, OC, QC, LLD (198!) john l B!fd, QC (2005)

January 16, 2014

VIA ELECTRONIC MAIL

Paul J Brown+ Karen S Thompson~ Terence W Yu+ James H McBeath+

Susan C G1lchrist George J Roper

British Columbia Utilities Commission 6th Floor, 900 Howe Street Vancouver, B.C. V6Z 2N3

Josephine M Nadel+ Allison R Kuchta+

James L C.upick+ Patrick J Haberl+ AndreJ Beaulieu+

0

Harley J Harris+ Paul A Brackstone+

Edith A Ryan Daniel H Coles

+ Law Corporation Also of the Yukon Bar

Also of the Alberta Bar

Attention: Ms. Erica Hamilton, Commission Secretary

Dear Sirs/Mesdames:

PO Box 49130 Three Bentall Centre 2900-595 Burrard Street Vancouver, BC Canada V7X 1}5

Telephone 604 688-0401 Fax 604 688-2827 Website www.owenbird.com

Direct Line: 604 691-7557

Direct Fax: 604 632-4482

E-mail: cwcafer@owenbird,com

Our File: 23841/0092

Re: FortisBC Inc. Application for Approval of a Multi-Year Performance Based Ratemaking Plan for 2014 through 2018 ~Project No. 3698719

Re: FortisBC Energy Inc. (FEI) Application for Approval of a Multi-Year Performance Based Ratemaking Plan for 2014 through 2018 ~Project No. 3698715

We are counsel for the Commercial Energy Consumers Association of British Columbia ("CEC"). Attached please find the CEC's first set of Information Requests on the intervener evidence of Barbara R. Alexander for the Canadian Office and Professional Employees' Union, Local 3 78 (COPE) pertaining to the above-noted matters.

A copy of this letter and attached Information Request has also been forwarded to FortisBC, FEI, COPE and registered interveners by e-mail.

If you have any questions regarding the foregoing, please do not hesitate to contact the undersigned

Yours truly,

cc: cc: FortisBC Inc. cc: FortisBC Energy Inc. cc: Registered Interveners

{00094427;1) AFFILIATED WITH AIRD & BERLJS, TORONTO

INTERLAW MhMRER UF JNTERLAW, AN INHRNATIONAL A::.SOC!AT!ON

Ut !NIH.PrNJH.NT lAW FIRMS IN MA)l\R WORLD CENTRES

C6-11

COMMERCIAL ENERGY CONSUMERS ASSOCIATION OF BRITISH COLUMBIA (CEC)

INFORMATION REQUEST #1 ON INTERVENER EVIDENCE OF BARBARA R. ALEXANDER FOR

CANADIAN OFFICE AND PROFESSIONAL EMPLOYEES' UNION, LOCAL 378 (COPE)

FortisBC Energy Inc. (FEI) Application for Approval of a Multi-Year Performance Based Ratemaking Plan for 2014 through 2018

Project No. 3698715

AND

FortisBC Inc. (FBC) Application for Approval of a Multi-Year Performance Based Ratemaking Plan for 2014 through 2018

Project No. 3698719

1.0 Reference: FEI Exhibit C2-10, Testimony of Barbara R. Alexander on Behalf of COPE (COPE -Alexander), Page 9

not mtem to

customer">.

term

to theo SQI

portion

1.1 Would Ms. Alexander agree that under PBR there is an incentive to reduce service quality that is not present under cost of service regulation?

1.2 Please confirm that the purpose of including Service Quality Indicators in a PBR Plan is to ensure that service quality and other performance standards are maintained at an appropriate level during the PBR period.

{00094391;1}

2

1.2.1 If not confirmed, please explain why not and provide further elaboration as to the purpose of Service Quality Indicators under PBR.

1.2.2 If confirmed, would Ms. Alexander agree that service quality performance metrics that are applicable under PBR, would be reasonably applied under Cost of Service regulation as well? 1.2.2.1 If not, please explain why not. 1.2.2.2 If yes, would Ms. Alexander also agree that the imposition of

service performance metrics under PBR need not necessarily be diminished under cost of service regulation? 1.2.2.2.1 If not, please explain why not.

1.3 Would Ms. Alexander agree that under PBR there are disincentives to improving performance standards and service quality that are not present under Cost of Service regulation? 1.3.1 If not, please explain why not.

1.4 Would Ms. Alexander agree that, excluding disincentives, there is likely to be less corporate focus on improving service quality and performance metrics under PBR than there is under Cost of Service. 1.4.1 If not, please explain why not.

1.5 Would Ms. Alexander agree that there may be financial incentives for a company to improve its service quality and performance mctrics under Cost of Service that are not present under PBR?

{00094391;1}

1.5.1 If not, please explain why not. 1.5.2 If confirmed, would Ms. Alexander agree that a company is more likely to

improve its performance metrics under Cost of Service regulation if it is able to do so within the agreed acceptable level of overall cost than it is under PBR? 1.5 .2.1 If not, please explain why not. 1.5 .2.2 If so, please give examples of how a company might be financially

incented to improve its service quality and performance metrics under Cost of service regulation.

2

3

2.0 Reference: FEI Exhibit C2-10, Testimony of Barbara R. Alexander on Behalf of COPE (COPE Evidence- Alexander), Page 2

and

I

and

the

Con:ttnission I ,,vas lead staff

mthe Service the

Co.

2.1 Please confirm that Ms. Alexander's experience with respect to Service Quality Indicators in Canada did not include participation in the Alberta Utilities Commission (AUC) most recent PBR process (Decision 2012-237) nor the process to modify AUC Rule 002 for application to PBR.

2.2

{00094391;1}

2.1.1 If not confirmed, please discuss Ms. Alexander's participation in the AUC PBR process and the process to modify the AUC Rule 002 in preparation for PBR.

2.1.2 If not confirmed, please provide Ms. Alexander's views with respect to the AUC analysis of the issues regarding performance measures and maintenance of service quality during PBR.

Please confirm that Ms. Alexander does not have direct experience with the OEB's or other Canadian Commissions' processes related to PBR plans for energy related utilities. 2.2.1 If not confirmed, please provide Ms. Alexander's direct Canadian

experience with respect to energy related PBR plans.

3

4

3.0 Reference: FEI Exhibit C2-10, Cope Evidence-Alexander, Page 20; FEI Exhibit B-1, Page 42 and FEI Exhibit B-8, CEC 1.51.3

A:

Do similar

one Ctiffent PBR

to

or more ocntts.

\0 C011Slder the

7. !n A!berta and

14 FEl that !l"'"J!l<>SM'"') tb,at no 15 or tile SOls -M part d pr~>l'd PBR

of its but that the Ontario

The

Ga::t Me!ro

'"''·"'"""' pena\Ues or rewmds.

or pen<llil1!1i be 3lt-.~ t? me perlcrnu.nc>: ,,. con~i ¥.1tth me a1Pj:)(~::h app<i€-d

natursd &"1>:1 e!!?Cllio in AJ~rt." th<!' 'tNO '-%>f'.)!C'•ID iun"Cdii:l:kl!'Y'> ~~

2 aell•1? in (rer~noe; Table !35- 'I Junsd>Oliona! Con¥Jariscn).

Board

of

next

3.1 Please explain if Ms. Alexander considered FEI and/or FBC statements made

either in the Application such as on page 42, or in the responses to information

requests such as CEC 1.53.1 to determine that only Gaz Metro includes financial

3.2

{00094391;1}

penalties as part of its SQI and if these were influential in her response.

Please provide any additional sources of information used by Ms. Alexander with

respect to Canadian electricity and gas utility PBR plans and the financial

penalties associated with SQis.

4

5

4.0 Reference: FEI Exhibit B-1, Page 41, FEI Exhibit B-1, Page 42 and FEI Exhibit B-8, CEC 1.51.3

None

COS r<&lusmg ::.t Hw end ol th<& PBR per;od !No annual r<&-cahbratwrg or true-upr

SOls 111 the PBR pk:ln l

Capitaltracl<ers

Included in 311 pl.ans

7 in AJ!>et1tl and ctum~<;.a the PBR

14 FEI arso trlat rt lice3!t no """'"'m penalties be alta'~ to trw perf6rrn:lrree 15 of lher ?,0\:;, as p.wt of propo1>ed PBR This r> ~sisll!!nl .Wh the to

g<ts and ~~;trt:c Ait'iitrt.a 2 act'Ve rn PBR (re"-~: Table BE· • Jun~K:ttcr,al nmrE>n<>rcn

4.1 Please provide Ms. Alexander's opinion as to the general public's understanding of service quality indicators and how they would apply in performance based regulation.

4.2 Would Ms. Alexander agree that, without further clarification, the Application and responses provided by FEI and/or FortisBC would reasonably convey to the public including ratepayers that there are no financial penalties associated with missed service quality parameters under PBR regulation in Alberta Electricity and Natural Gas, Union Gas (2008-2012), Enbridge Gas (2008-2012) and OEB 4th

Generation IR (Electricity)? 4.2.1 If not, please explain why not.

5.0 Reference: Alberta Utilities Commission PBR Brochure, Attachment 1

5.1 The Alberta Utilities Commission brochure entitled "Performance Based Regulation" is included in the Attachments to this document (Attachment 1 ). It may also be found

{00094391;1} 5

6

on the Alberta Utilities Commission website at: http://w"\vw.auc.ab.ca/news-room/brochures/Documents/PBR brochure.pdf.

5.1.1 Please confirm that the brochure is intended to provide the public with information about Performance Based Regulation in Alberta, and that this public would include ratepayers. 5.1.1.1 If not confirmed, please explain why not.

5.1.2 Please review the following Question and Answer included m the brochure:

Q: "That's all well fine and well, but how will standards be enforced?" A: "There will be well-defined service quality measures, targets and non­compliance penalties. The AUC has the power in law to fine companies up to $1 million a day for each contravention, the power to set utility terms

and conditions, and the power to force a utility to give up any profit it may have gained from breaking the rules."

5.1.2.1 Would Ms. Alexander agree that the intention of the Alberta Utilities Commission was to convey to the public and ratepayers that there are financial penalties attached to defined service quality standards (such as SQis) in the Alberta PBR plan? 5 .1.2.1.1 If not please explain why not and address how such

answers might be reasonably viewed in the public's mind, considering the general understanding of PBR plans.

5.1.3 Would Ms. Alexander agree that the information and responses provided by FEI and FBC to the public with respect to the Alberta Utilities

Commission PBR plan is inconsistent with that provided to the public by the Alberta Utilities Commission?

5 .1.3 .1 If Ms. Alexander does not find it inconsistent, please explain why not.

5.2 Is Ms. Alexander aware of any type of penalties that may be associated with missed performance measures that could occur while a utility is operating under PBR in any other Canadian jurisdictions such as those in Alberta that have not

been included in FEI and FBC's analysis of SQis and financial penalties?

{00094391;1}

5.2.1 If so, please provide a list of the size and type of penalty that can accrue for each utility, and provide the sources of information including the

6

7

appropriate Orders or legislation so that they may be reviewed by

interveners and the Commission.

6.0 Reference: FEI Exhibit C2-10, Cope- Alexander, Page 20; FEI Exhibit B-8, CEC 1.51.2; FEI Exhibit B-1-1, Appendix D9-3; Alberta Utilities Commission Decision 2012-37, Page 191, pp 881 and Page 200, pp. 930-931

only one current plan Gaz

15

to

or more occurs. maxmmm. score

two

to next

AUC Decision- Commission Findings

88.2. The Cou:m:lission \\'ith the ;lddttioo of new metric;; ;lud with the establi;;,hmeut of defined ±0r tho':ie metncs ACC Rule ·will ""''Qh'''·A·•"l"addreso; d1e for t,ernce measruement and ooder PBR. As the Comnlio;;;1oo has deten:nined in Se<:ttoo 2.4 of this dec~sion tr.at it wtll not indnde transmission it '>'lilt dtetefon:. not be necess~y to any ttetibrmauce ntensttres foc ttammtssicm nt this tnne.

AUC Decision Commission Findings

{00094391;1} 7

8

1u addtth:>n to nev; mea·~ure', and 5ettmg wrthom targets, the C01mni~~10U Ci)UStders that 1! t', mtt>Yfl'lllit o.k:;tome:t', uude:rstlllid the couse:que:uce~ that could fion1 a C<:'n.J:p,'\J1Y

>e:tYrce: T1us cnt:i.c,>l if a patten! of cou•,:',tet1t f,l.Jlnre- arv;e-;; At:'C Rule C011snhat1c'n ptoc.::ss. the Comnli~swn >cnll

:;tru.ctnte t:01 these me-tncr, part of the adnllnisttatiYe sche:rtte: authonzed under S.ectioo of the EJ;:cn·ic [.'rflriie:; Act lllid Section ofthe: Gr1:: L'riliiit.l:; A.cr. The C Ollll.tUS.S.lon expects that thl'> stt1.1enue win mdude auuo1mt1> conmle:ns,urate with ·,·wlatwth of the up to and '"'~J"rl"'' adnumit! au ve

931. cctnnleh<"H1 of the c:; .. m.suh:tti\'e process the Commi•>:.1on will E:.sue a miitr"''""'" the process to be t~::>liov:ed \Vi.th !'ef;pect tO the

ot other '"."""'"'"'"

6.1 Would Ms. Alexander agree that the Alberta Utilities Commission adoption of AUC Rule 002, 'with the addition of new metrics and with the establishment of defined targets for those metrics currently without them' and 'applying penalties in the event of non-compliance' under PBR essentially acts as a proxy for employing service quality indicators with financial penalties? 6.1 .1 If so, please provide Ms. Alexander's opinion as to the equivalency of the

AUC adoption of AUC Rule 002 and the application of penalties with the use of service quality indicators with financial penalties under PBR. Please highlight any key elements distinguishing one process from another.

6.1.2 If not, please explain why not and provide a discussion as to the differences between Service Quality Indicators with financial penalties and the service quality metrics under AUC Rule 002 with the application of penalties in the even on non-compliance.

6.2 Please provide Ms. Alexander's understanding as to whether or not other utilities rely on equivalents or proxies to Service Quality Indicators in their PBR programs. Please give examples including Canadian examples where possible.

6.3 Would Ms. Alexander be willing to change her statement to the effect that there are other PBR plans in Canadian jurisdictions, other than Gaz Metro such as Alberta that provide for the equivalent of SQis with financial penalties?

{00094391;1}

6.3.1.1 If not, please explain why not 6.3 .1.2 If so, please prepare a revised statement with respect to financial

penalties associated with SQis in Canadian jurisdictions, including Alberta and any other jurisdictions that may make similar provisions with respect to financial penalties available for missed performance standards.

8

9

7.0 Reference: FEI Exhibit C2-10, Cope- Alexander, Page 20

A one current PBR

to 1f au

S5~'o or more occm'S. maxunum score

111USi $100 000

two

to next

7.1 What evidence does Ms. Alexander have that the OEB is considering penalties for its next generation of PBR? Please provide the evidence and cite sources.

7.2 If Ms. Alexander has an opinion or evidence available, please provide an overview of the types and ranges of penalties that Ms. Alexander anticipates might be considered/implemented in the OEB next generation of PBR.

8.0 Reference: FEI Exhibit B-1-1, Appendix D9-3; AUC Decision Pages 190-191, pp. 880 and Pages 194-195, pp. 896-900

Al'C Rnie

·~""+iw•''"'"""' tnetnc s induded ill AUC Rule m:xi."lt<~d in comu1tatwn v;ith stakehoidexs.

• of tbe metric:\\ and hoYv are will allo'>v fi:;r ttend IOt diOSe Uletrits WIDdl OJ.Ve t~n '¥111Ce 2004. The

upon IDstoncal databases to any trend<; ill SetVKe co:rectiYe actton rf "'en:ice ie·veh decline

• may make deci~wns and take actiotl::> the PBR tetm 1J:illch may have coo sequences not apparent the tern. AUC Rule v,;iJl enable the

{00094391;1} 9

{00094391;1}

10

Conro.>.i::s1ou to monitor the consequen;;;:es of those nctioos after the PBR term cAvuc:>.

of the meclh'llli-sm in after me end ofthe term. • di'>Ct~ssed fmthet in Section 14.2. if AUC Rule is acCOffi!>ru:ue·ii

ad!Uo>tfiletlt to the PBR fJ."'tmula. """"''t" tv CJY.ti.Stl.tl.1et behm:iom can be a verde&

that the fo1mnla. certam sensitive comnnlet5 flh1Y react to cons:tm.1e more ener~y which. in tum,

conid mcrt'ase reYennes t~Jt the company. In such an eYent. a .fu:tatJtcr:al benefit to the company.

of the El.octric [ 'riliric:; Acr :md Section of the Gas 'L'tilirie:; Act ::~n•t~>r"'t'' for the Couroli~>',ion take anY Gf all ;;;f the ""'w'.'""

of the optmon mat au O\\'Uer of an e1ectnc ot a gas dt·ctnbut;Jt hao vrith its rules ·~NY;ce ;,tru1drud.s. These •,tate

of the that the 0'>\:Uer of an eh~ctnc failed 'ltmdards. the

drrect the ovtner and rea.sortable

drrect the C'i\11<:r

the ( ornmrs;:ruL to compen>ate the mles r,.,,.,.,, .• h""

G,z [,"tilincs

m1 .JJnoLmt sn;:c:ltlea <:>'l\Uer- s t~1.lltrre

stam:hrd,,

If the Cow.xrusswn ts of the the rustnbutor .:1r default fa'lled or rneet ttlf' 5ervlce :;rmdards mleo;. the Comuri ss:Qll may

or on which the

A etle·hme amount to addre:'l;; e\:Otlvmic beue.fit \Vhere the C0UUlll'>it<'llt5 of the "'"ti.U"'ll that the person has den,:ed m ecouoouc: benefit a re•'mlt of the c:ootrc:;entiotL

10

11

898. The C01tnrl.ission COil~Hien rl:ult these in '>Vith a !&lure to maimain sen.·ice

• ecouomtc benefits m<:.- '''"'"'""'

• fmh..1res occur, the ~ae of the the company a result of its actwn..

• The revie\v process in the alto'ti<vs the corup!llly the to the source or cause ofthe failrllt> and anrne that a not wmranted or

be lessened. ~·

pe:tto:rm.:mc·e borms should be :x1:auabie to t1Y:: As noted this

is to mceut beh;n,1our th.>t would be '>Ul1!1ar to that of a But m a market, company may mcrease its

bm tisb cu:stomers. For r!H?n<:"P<>lv cn:e;tome:n Customer:; h.1ve no choice hut to pay the

tor a sen:ice cannot atl~crdn1.1 Funhec rf the mdtt"uial cmtomers thilt IPC~.A retnesl'1.1! le•vel c,f service can elect to cc>t:tract with the co:m;:mn:le',

8.1 Would Ms. Alexander agree that the intent of the Alberta Utilities Commission in relying upon the existing legislative provisions, including the imposition of penalties to address enforcement should service quality degrade is the same intent as those Commissions that undertake to include defined SQis with penalties? 8 .1.1 If not, please explain why not.

9.0 Reference: FEI Exhibit B-1-1, Appendix D9-3, AUC Decision, Page 194 and FEI Exhibit B2-11, CEC 3.41.3

.. Act tuay

A:u ru:notm.t not exceeding S 1 trullicn fot each d::ry or part cf a day on vvhich the Ct!iltrJ:l".te"lltH):U OCC1trf"' O:t CCl:HUll.ie-So

(b) A vue-tune amount to a<lrue~;s econouuc l:.>enefit 1.vhere the Cc,nmuss:i<:m of the tlk-'lt t.h~ ha~~ d~ivecl au e~~onc)1:nic benefit diK€-'ctly c~r indir~ctly a l~ef;tth

The C\)ztu.:ni~;;sion cou"Sid'.et> that tlle-:se legi-t~L'ltlt''e :reulezh~$ provide the ft:>Uo\vi:ug beuefits Ul dealing with a f;;uhtrJ? to n:rJiintain sen·rcJ? q<1<1ohty standan:h dun:ng the PBR tenn.

• The potent.tal ',i:ze of the penal~tes under Section 63 along: •.1tith the disgo~(gement of £m)'" economic benetlts discot.1rages set'"\-tc-e If service frufu:res occnL the sue of the penalty can be ta1kned t'lenefit the ccutpau}~ as a result of it'S: action, The revte·,· m the penalty altovn, the the opp<>rtunity to

a.ud a:t gu.e that n \Valxa.t;.te-<i

{00094391;1} 11

12

9.1 Would Ms. Alexander agree that the penalties available to the Alberta Utilities Commission under Section 63 in conjunction with AUC Rule 002 provide an incentive for the companies to maintain service quality and other performance indicators under PBR? Please explain why or why not.

9.2 Would Ms. Alexander agree that the penalties available to the Alberta Utilities Commission under Section 63 of the Alberta Utilities Commission Act in the event of a failure to maintain service quality standards during the PBR term would be appropriately applied under PBR? 9 .2.1 If not, please explain why not. 9.2.2 If so, would Ms. Alexander consider the penalties available to the Alberta

Utilities Commission as adequate for ensuring the maintenance of service quality standards under PBR?

9.2.3 If so, would Ms. Alexander agree with the AUC that the potential size of the penalties under Section 63 along with the power to direct disgorgement of any economic benefits is a benefit of using Section 63 as a means of dealing with a failure to maintain service quality standards? Please explain why or why not.

9.2.4 If so, would Ms. Alexander agree with the AUC that the ability to tailor the penalty to match the benefit gained as a result of its action is a benefit of using Section 63 as a means of dealing with a failure to maintain service quality standards? Please explain why or why not.

9.3 Please provide Ms. Alexander's opinion with respect to a company having 'an opportunity to explain the source or cause of the failure and argue that a penalty is not warranted or should be lessened' under PBR.

{00094391;1}

9.3.1 Does Ms. Alexander believe that a company should not have the opportunity to argue that a penalty is not warranted or lessened under PBR? Please explain why.

9.3.2 Please explain whether such provisions are typical of PBR plans or not and give examples.

12

13

10.0 Reference: FEI Exhibit B2-11, CEC 3.41.4.2

4 1.4 2 P!eatte

14

The Compcm1es Hltefpret 'perfom1ance standards' Alberta, there are no

me 'Mth pertorrnance

a P8R rxlerJflr:;;,'iv related tc non­

of

10.1 Please review the BC Utilities Commission Act, and provide Ms. Alexander's comments with respect to the ability of the BCUC to levy penalties with respect to non-compliance with performance standards.

10.2 Please provide Ms. Alexander's view of the comparative ability of the AUC to manage performance under PBR using Rules 002 and 003 with enforcement under Section 63 with the BCUC's acceptance of the SQis proposed by FEI and FBC with no financial penalties.

11.0 Reference: FEI Exhibit B2-11, CEC 3.41.3 and FEI Exhibit B-6, BCPSO 1.26.2

11.1 Does Ms. Alexander consider that the lack of specificity to Rule 002 or SQis and the availability of maximum administrative penalties for non-compliance in any way diminishes the applicability of Section 63 to service quality management under PBR? 11.1. 1 If yes, please explain why.

11.2 Does Ms. Alexander consider that the lack of specificity to Rule 002 or SQis and the availability of maximum administrative penalties for non-compliance in any

{00094391;1} 13

12.0

14

way diminishes the effectiveness of the provisions in applying financial penalties for missed performance indicators? 11.2.1 If yes, please explain why.

Reference: FEI Exhibit B-1-1, Appendix D9-3, AUC Decision, Pages 191 and 195, and Alberta Utilities Commission Bulletin 2012-09

382. The Commission is E>nhsfled that, ;vith the add!.tion of new metries and v.:ith the establishment of defmed v:ithout them. AUC Rule 002 will 5;'!:'trs:t3c:tonlvaddrec:"s the for service under PBR As me Commisswn hat, determmed in Sechon 14 of this dectg:ion mat tt Will not indnde t1En£ntifiSl0n ll:§ it \1/lll. therefore. f10t be ne-,:efi:§llf'Y !0 c"lP•r<•Jnon any petfi:Mlllll:tlx:e measures for trsusmission at this tune.

883. the Commission ,,.·ill inittate a consultatton pn:x::ess befote the end of 2012 to te\·ie>v and tevise AUC Rule 002 m a The comperues and intetTenets wil! be mnted to 1n the consultation ptoces'>

lL3 Cow:;uhariou process

90 l. The Conmli•;:.1on in this deci:;ion is settmg om dnection:; to1· the At:C Rule .:::>:multation fur the 1sstte1, to tlso;i:,t in the consuhat:icm ptoce~s

metric~

'""'m"""'""'"''m reportmg

distnlmttcn compame'

S.takeholder e>:nHl.llt;>O<:>n ou ,'\:l'C Rule {h):!: Seni<e rmd Rep<>t"~ing fot' Ownei'S t:>f £lr<:n"k

""'~•·"''·-·

TI1e i"Jbexta l~tilitlec:c C•:n>:J.mic.:;;on {ACC ~,:., ... t:_~c· Rule

t:f',...;;~:;-e Ulett'!C:; ::'l..U1: e::tly

Perfonm1uce fot·

R.:ul.z- ''\:t:iii ~n.:.£.:tcttJai1V

:u-~3 ';,.'t.:u €1.::L¥e1::tt

tye-.:'tl-oa: .::. 4 of t.h1::,

onc=~·"c,""Oc"c,._ "1;Cii' (.;=::lU-:-eci m

:?BE' .. pl.;~.n.., n 1.~'UL the: e.f'ot"e~ b~ l~~,;:::e :~~'")'to u~:Jt::t.ue f~:a· t:l:-;:1 .. n::n.n-::::-'1.oo. ;;;t '±.t..t:: nul>*.

Ac-ccr:ci:tng.:y. the c-t"" to ;~:e,:·1.en~ A.:Ud.. : ... o .. :~eJr"""'·ti:t.a·'7.- 1'><"lll

U"'l 4 n..::u:*lY uun..n-·er p.xxn::::pate m tL'<C cOJ::.::ci:<J:tv:::u

T:he c <:;~:t:rill"U:::·:::t«'l m.. tlu._:. ~Z:t::-1-011. >>?~t'u:'.g con:-'!kl:nn.~'::$0. f;.:;a: th-e fo-U~1.-~g t.:o~ uec:. to c<.:n::t::u:tattou p~to-c<€'::.:

uun;;,tut.E the al>ot·e~n:JJetll't&ned rule consulr:Jtt2::•n '~ we, mtends to :Ul::tplen:ent

{00094391;1} 14

15

12.1 Would Ms. Alexander agree that the AUC specifically established the stakeholder consultation process in order to prepare AUC Rule 002 to be effective as a means of establishing performance quality metrics under Performance Based Regulation. 12.1.1 If not please explain why not.

13.0 Reference: FEI Exhibit B-6, BCPSO 1.26.2 Rwte C02 is a gJ?n~al

14 '.XtnSJ!t .. ~t.,?-n ;:t'~ss f~¥ls

15 \¥Duld '1ct be :o a P8 R 1e nr't1sh~:f.

other €:·'"'~ lf :h,e m.;.,~•.ru>;;Y. ~t~ ;j.;~f'l+d rni?•;hani'Ytt>

to 2!! the ut,'iit""'s ,.,.,r; <2<f:er t~ PB:::: t<Y"''

13.1 Does Ms. Alexander consider that the lack of specificity of Rule 002 to PBR plans, and its continuation beyond the PBR period in any way diminishes the effectiveness of the penalties that are applicable under PBR. Please consider the consultation process that has developed.

14.0 Reference: Excerpt from AUC Bulletin 2012-24 (FEI Exhibit B2-11, CEC 3.41.3.3) and FEI Exhibit B2-11, CEC 3.41.1

{00094391;1}

A.rc Rule 00:!: Service Own<en of Eiec t1·k

I'<edonn.uace .\Ionit•:>Iiug ;;nd Reporting for C*as Dhnihunn·s

The ,.:kjt,;;;rta Unhtre•: C>.:m:u:n::z'l.o;n <At:C the ret.1laren::ten:t·:; for :ver"'"l::e

:regubtwn through ;unendrnento

15

of

st4.1J,~eho1ders re2:a.rdinsr !iutl:e:r re-f:n~::z:J.ent:, vvnh - ·- the poten.ttal

11~'ltters reL~tutz iu"'t_,~cr]"\~e lD.fonr..,~nv:n ~f:s~tems c ll."1Ltl_ge--;; for

vnll be: :'nrther m the ad.nm:u -;narr, ·e _.l~t:'r Se:ctio:n

16

3 41 Pte!!s,e otherw'tSe 4 detemvned that it other legislati;,>e on c: ~--J pertcrmance '""'""'""n' Rule 002 '2~rvlce

Peffommnce 7 SV$'t""n's Gnd G.ls

9

14

14.1 In light of the consultative process specifically established to prepare AUC Rule

002 for use during PBR, and AUC's statements that the Commission would

continue to rely on Section 63 of the Alberta Utilities Commission Act, does Ms.

Alexander agree with FEI's statement that 'The Alberta Utilities Commission's

(AUC) Decision 2012-237 rejected the use of any PBR specific reward or penalty

mechanism'? Please explain why or why not.

15.0 Reference: FEI Exhibit C2-10 Cope Alexander, Page 19; Exhibit B2-ll: CEC 1.41.3.3 and CEC 1.41.3.3; AUC Bulletin 2013-30 available at: http://www.auc.ab.ca/news­room/bulletins/Bulletins/2013/Bulletin%202013-30.pdf and Rule 002 Proposed Changes for 2014 page 2 available at: http://www.auc.ab.ca/rule-development/service-quality-and-reliabilitv/Documents/ AUc<%20Rule%20002%202014%20AUC%20responses 0A.20to%20stakeholder%20co mments.p

customers to 011€'

certam mmumun

are not rnet to

{00094391;1) 16

{00094391;1}

17

a copy AUC Ru!e 002.

4 .3.3 Please prov1de 3 Bunetin 2012-24 6. and other uvuu;.,;u

Al!C Bulletin 2012-24:

occur

or the hn'> been e!t!k'Jtnent;; io A tiC Rule 002·

to Rule 00 2 on 9.2013

renewmg and re·nsmg Rult.> 002 \n11 be an one. Further d!'>cusston w1H o\vners · annual Rule 002 r.:new to be ;;,cheduled for 2014.

and the cotmnentc> recel\'ed under the Rule

17

m the consultation and for to the rull:'. The AUC

vnth the AUC-:, ''"'""''"<.i~<o on

18

RBYl>&W consul!Jtron_

15.1 The AUC's proposed changes "This rule sets minimum service standards for entities subject to its application. Noting in the rule is to be construed as relieving parties of other service quality obligations incurred by operation of other applicable statures, regulation or AUC rules was recently implemented in AUC Rule 002". Would Ms. Alexander agree that the change, included in AUC Rule 002 as a result of the consultative process arising from preparation for PBR, could be considered as 'minimum thresholds' that were to be maintained during the PBR period? 15.1.1 Ifnot, please explain why not.

16.0 Reference: FEI Exhibit D9-3, AUC Decision, Page 190-191, pp. 880

At:C Rule

metric<, mdu&:d ill AUC Rule '.vere de1?el<Jl}ed nPtlat~:a m cousultMtoo. wtth stakeholdets

• are will allow tor ttend amuy:>ts, those metm::. v,1uch h4i'>'e !J,een ill Sillce 20/,Jt 'Illi: Coum:lls:;;1on can

upon !'..t;;tonca1 cl1.tabases to trend.> in set'Fice and take c0nedn<: act:on tf o,ernce let·eb dedine

• dedsto:t'l\ rmd take actions; the PBR term '>Vhidl the term. At:C Rnle v.rill enable the

{00094391;1} 18

19

Cet:ru:nii>sion to monitor the conseqt21ces, oftho:;e adzons after the PBR term exprres. re;r.l!!<lltess of the mechanism iu afte! the end of the term.

discrv,sed ftmher m ~chon 14.2. if AUC Ruie t:.ther thru! u1chu-lm

tlll€~Xp.ect<~ and ~·uou<~a.uy

sensitive co~;J.unets may react to constw:1e more energy which. in turn. PG•l'eul•mlJty mcreaM~' neveune:; t'br the company. In suc.h an 1:'\'eut a

=<wniti ~efit to the company.

16.1 Does Ms. Alexander agree with the AUC that continuity of metrics to enable trend analysis is valuable to a Commission in establishing performance metrics underPBR? 16.1.1 If not, please explain why not. 16.1.2 If yes, please discuss the advantages of having historical analytics

available to the utility commission in managing performance under PBR both for establishing performance metrics and for establishing penalties for non-compliance.

16.2 Does Ms. Alexander agree with the AUC that companies could take actions to further their financial or other goals during a PBR term that have consequences not readily apparent during the term? 16.2.1 If not, please explain why not. 16.2.2 If yes, please provide a discussion of the types of actions that could occur

under PBR and the types of consequences that could follow, and include a discussion of the how the severe such consequences might be.

16.2.3 If yes, does Ms. Alexander agree that it is appropriate to monitor the consequences of company actions after the PBR term expires, regardless of the rate-setting mechanism in place at the time, with the ability to set

penalties? Please explain why or why not. 16.2.4 Please explain how such continuity and penalties might be incorporated

into a PBR plan with SQis and penalties, rather than with legislation.

16.3 Does Ms. Alexander agree with the AUC that certain penalties associated with formula adjustments could result in undesirable impacts, such as financial benefits arising from intended penalties to the company?

16.4 If not, please explain why not. 16.5 If so, does Ms. Alexander agree that the penalties available under Section 63

provide for flexibility in addressing issues with respect to avoiding undesirable consequences? Please explain why or why not.

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20

17.0 Reference: FEI Exhibit B2-11, CEC 3.41.3.4

c!rect penGtty and reward "'"'''h'"'i"".," spproach peno!ties

17.1 In its response to CEC IR 3.41.3.4 FEI discusses the directness of penalty mechanisms with respect to PBR and distinguishes between a penalty for non­compliance that is arguable and/or reduceable and one that is generally without a review process. Does Ms. Alexander agree with the FEI distinction in determining applicability to PBR? Please explain why or why not. 1 7 .1.1 If Ms. Alexander agrees with the FEI distinction, please provide Ms.

Alexander's opinion and provide a discussion as to why one method would be more preferable than the other.

18.0 Reference: FEI Exhibit C2-10, Cope-Alexander, Page 21 and FEI Exhibit B2-11, CEC 3.41.3.4

the

amount

to

18.1 In its response to CEC IR 3.41.3.4 FEI discusses the directness of penalty mechanisms with respect to PBR and distinguishes between a penalty for non­compliance that is linked to PBR incentives and computed on a previously pre­determined formula, versus one in which a review process is launched and the

{00094391;1} 20

21

Commission determines if a financial penalty is warranted. Does Ms. Alexander agree with the FEI distinction? Please explain why or why not. 18.1.1 If Ms. Alexander agrees with the FEI distinction, please provide Ms.

Alexander's opinion and a discussion as to why one method would be more preferable than the other.

18.2 Please provide Ms. Alexander's understanding with respect to other utilities' use of proxies or alternative measures as a means of ensuring service quality.

19.0 Reference: FBC Exhibit B-7, BCUC 1.67.1

1

Residential Ex:tensions

T1me

:r.n~r'''~r,,.,,.. Tn11e

first three imliwtors above WBre 1nduded the the to routine

are;:J of customer serv'lC:e and wm·.n-;, '""'"""""

PBR tem1 such that w·a1t hmes for new custo~ner connecttons are at an ""''"';.;''"''"''"" serv·!ce.

of measures "''"''"''"''""' tool of the Ov'eora!! service to customers ..

that reflect the overall are3s of custorners.

19.1 What are Ms. Alexander's views with respect to the 'optimal number of measures' for SQis under PBR? Please address how many SQis are optimal, and why.

{00094391;1} 21

22

20.0 Reference: BCUC Order G-51-03, Appendix 2, Appendix A, Page 21 of 47 http://www.bcuc.com/Documents/Decisions/2003/DOC 160 G51 TGI.pdf and FEI Exhibit B-8, CEC 1.52.3.1

•

• met or

•

•

52 Pl1?;;rs>?

Dh,ange

ass.6'ssrr~d rl&"¥1~ prorxss, rwt>¥"'A?w oo s::::H resuft> ff tKA<f>? is <~ ma~El'~: ~neg>? S>Er¥1<:>!-

stakehold>?rs, stakehcioers w!i ·~ a c)',ar,ge tl'ai can address that clEment and put 1\;)n,W;,n:l} 1C t:"le FEf w'At v..:Yk oo~rat:veiy eDsure oo<r(j)itX"•ZE

teqL'it~;ts,._

20.1 Would Ms. Alexander agree that there has been a shift in the onus from the utility to the customer/rate payer in assessing and improving performance from the previous PBR plan to the proposed PBR plan? Please explain why or why not.

20.2 If Ms. Alexander agrees that there has been a shift in the onus, please provide her comments with respect to the effectiveness of SQis in managing service quality and performance metrics in each method.

{00094391;1} 22

23

21.0 Reference: BCUC Order G-51-03, Appendix 2, Appendix A, Page 21 of 47 http://w,vw.bcuc.com/Documents!Decisions/2003/DOC 160 G51 TGI.pdf and FEI Exhibit B-8, CEC 1.51.2

• Dirc-::tional mdicators will he

• Trw onus

• Each

•

that a benchmark

O\VH ments and a material deviation from the bcn-::hmark

argue thai the ben-::hmarks seJTKC In bcnchrrwrks mtbt

FErs pr~ SCli ~d te cc~~ec ,;;sa ti?Wi:'i!tl FEJ

lhr€shold to ,'!Chiev€ :.rd trtsti?Jd

rol1 ~ OOtr!paf~,.;l.

21.1 Please compare the statements that 'Each SQI will be evaluated on its own merits and a material deviation from the benchmark for any single performance indicator that cannot be explained by events beyond Terasen Gas control is sufficient basis to argue service quality deterioration' with the most recent statement that 'the proposed benchmarks are not to be considered minimum thresholds to achieve and instead are reference points against which levels of service quality can be compared'. Would Ms. Alexander agree that there has been a significant change in the tone resulting in reduced opportunity for stakeholders to hold the companies responsible for deviations from benchmarks since the previous PBR plan? Please explain why or why not.

{00094391;1} 23

24

22.0 Reference: BCUC Order G-51-03, Appendix 2, Appendix A, Page 21 of 47 http://www.bcuc.com/Documents/Decisions/2003/DOC 160 G51 TGI.pdf and FEI Exhibit B-8 1.52.1

in

+ The onus of is n:asonablc tlmt it \Vch

•

v,ill be evaluated on 1ts own merits Nnd a material d.:.'viation from thi:: benchmark

argtw that the hcndmurks or :<('rYicc to nr bcnchnwrks nm,;l

52. t 1-lo'.v a s>?'Vlce quJliity· or ·sust.:Mned S€f:<JVS degadl!;on Of !he StJJs' b<e oo"~ and ~~~>hat p<l!nOO d t1€E(j to

FE! dce5 oot !:tei1- lh<'lt ·sustained Si!ri<C«1s d<!'ifU!d:tlion' ez.t1 b<e d!?fined a mar~ that 'iMitlld fCl"E'~ 31\ cin:umstanoos. FC!' e~4Jie, 3 lire or 1>~>?¥ un..,Apected >?V>:!r-:1

shon degad&tloo Of ce"'.-'l.m St)!s a ndt t"' as .:> 1Hts(z~;r,\?d ~OO'!i ti~rM~:;;lidr, while " ~!X;r btlt p.E;N>l~Mt ior\Gi·tefm degt<'ld3t;on d thi!> »me

b<e r~"'~ a.r> a su<-tair~ 'be\l¢«15 degt:adatort

Pl<!>a>a' r€'iicr !O r~~'Mi

S4JS1I!trl€d Si!'ric,;'S degradation to

22.1 Please compare the statement that 'sustained serious degradation' cannot be defined with the statement 'a material deviation from the benchmark ... that cannot be explained by events beyond Terasen Gas control is sufficient basis to argue service quality deterioration'. Would Ms. Alexander agree that there has been a significant increase in the vagueness of the parameters by which a stakeholder can hold the company responsible for their performance metrics from the previous PBR period to the proposed PBR plan? Please explain why or why not.

22.2 If Ms. Alexander agrees that there has been an increase in vagueness, please provide a discussion as to the ramifications of continued reduction in definitions and accountability for service quality indicators over continuous PBR plans.

{00094391;1} 24

25

23.0 Reference: BCUC Order G-51-03, Appendix 2, Appendix A, Page 21 of 47 http://www. beuc.com/Documents/Dccisions/2003/DOC 160 G51 TG I. pdf

• DucctionJi indicators will be in

• The mms of that a beth'lmnrk has been m ... :t or not m.:t rests with Tcrascn Gas.

and material de\ ;ation from the b.:nchrnark

• argue th,tt th<: bcnclmnrks ur S('f\'ice indicators need !o b,.• modifh:d, benchmarks must b.:' the

23.1 Please provide Ms. Alexander's views with respect to the ability for stakeholder to argue that benchmarks or service quality indicators should be modified over the course of a PBR period.

{00094391;1} 25

{00094391;1}

26

Attachment 1 (Question 5.1)

pr;:rtmm.'lrn:~··fmsW Yf.11Hl.¢t.ton J:Mf the

wmk the AUC m oomy'l

26

27

{00094391;1} 27

Huw abou1 tr ;w~mis.sion c:rHtl:p@tHt:S amt

tutls.tn\Mum rd;tt-e, '? WM Uwi ~pan 11r ?fiR?