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HomeMy WebLinkAboutCS 01/01 -, REPORT TO COUNCIL FROM: Gillis A. Paterson Director, Corporate Services & Treasurer DATE: January 4, 2001 REPORT NUMBER: CS 01-01 SUBJECT: Veridian Corporations Inc. Distribution Rate Application to the Ontario Energy Board - November 14,2000 RECOMMENDATION: It is recommended that Report CS 01-01 of the Director, Corporate Services & Treasurer be received and that: 1. Council: a) Council support the Distribution Rate Application as submitted by Veridian Connections Inc. to the Ontario Energy Board; OR - b) not support the Distribution Rate Application as submitted by Veridian Connections Inc. to the Ontario Energy Board; OR c) provide its own comments on this matter; 2. the Clerk notify Veridian Connections Inc. and the Ontario Energy Board of Council's recommendation (s) in this regard by January 10, 2001; 3. the Mayor and Clerk be authorized to execute an Acknowledgement and Agreement for each ofthe two Promissory Notes held by the City of Pickering; and, 4. the appropriate staff of the City of Pickering be given the authority to give effect thereto. ORIGIN: Director, Corporate Services & Treasurer AUTHORITY: The Energy Competition Act (Bill 35), R.S.O. 1999, as anlended The Electrical Act, R.S.O. 1998, as amended The Municipal Act, R.S.O. 1990, as amended Regulations Thereunder - FINANCIAL IMPLICATIONS: For the City of Pickering - directly, none; indirectly, approval of the requested rate increase by the Ontario Energy Board (OEB) will allow Veridian to commence increasing rates to achieve a market rate of return in a few years, if further increases are approved. Such a rate of return Report to Council CS 01-01 Date: January 4,2001 - Subject: Veridian Corporations Inc. Distribution Rate Application to the Ontario Energy Board - November 14,2000 Page 2 should allow Veridian to increase its working capital asslstmg in the financing of capital expenditures, the payment of taxes (or in lieu payments) and interest on debt. EXECUTIVE SUMMARY: Most of the attachments, with the exception of the Agreements, have been previously distributed to the Members of Council. BACKGROUND: Rate Application: Early in 2000, Veridian's Board of Directors approved the making of an Application to the O.E.B. for a 9.88 per cent increase in its distribution rates, resulting in a 14.6 per cent impact on the average residential customer. They also applied to phase in the increase with a first year impact of 4.7 per cent. On May 31, 2000 the O.E.B. issued a Notice of Application (see Attachment 2(b)) notifYing of a hearing and inviting participation in the form of observation, comment, submission or intervention. Staff of Veridian should be able to expand on this process and comment on the outcome. - On November 14, 2000 Veridian submitted an Amended Application to the O.E.B. (see Attachment 2 for part of this Application) and, forwarded a copy to the City for review and comment on December 19, 2000 (see Attachment 1) providing us to January 5,2001 to respond. However, some information was inadvertently omitted and Veridian was advised that the time provided was unreasonably short, especially given the holiday season (see Attachment 3). Veridian then extended the time frame for response (see Attachment 4) ahd forwarded the Treasurer a copy of O.E.B. Procedural Order previously omitted (see Attachment 5). It should be noted that the Application is in regards to distribution rates only, effective January 1, 2001. Subsequent Applications will be filed for future years' increases under the phase-in plan. Furthermore, a number of miscellaneous charges will also increase (see Attachment 2(d)). As noted in the Manager's Summary (see Attachment 2(c)) the Rate Harmonization as illustrated in the Tables on page 5 of Attachment 2(c) will also have an effect on future rates in Pickering. Moreover the Application may contain other information, rate increases, changes to charges or other matters of interest to Council that were not able to be identified or analyzed in the absence of assistance from Veridian and in the time available. It appears that Council must decide on the nature of its review and comment hence the multiple choices under Recommendation 1. Promissorv Notes: - Veridian requires credit facilities (loans or debt) to finance some of its actiVities, mainly acquisitions. The Royal Bank will provide the funding however one of the requirements is that their debt rank in priority ahead of any other debt owed by Veridian, namely the Promissory Notes extended to Pickering, Ajax and Clarington as part of the corporate organization of Veridian. These notes recognize this as they are, and always have been, Subordinated Notes. This dated Agreement re confirms this subordination in favour of the Royal Bank of Canada. Recommendation 3 provides the authority for the Mayor and Clerk to execute this Agreement (see Attachment 6) between Pickering and Veridian, in favour of the Royal Bank of Canada. Report to Council CS 01-01 Date: January 4,2001 - Subject: Veridian Corporations Inc. Distribution Rate Application to the Ontario Energy Board - November 14, 2000 Page 3 ATTACHMENTS: 1. Veridian - Letter to the Clerk dated December 19, 2000 attaching No.2 below in its entirety 2. Veridian - Part of Amended Distribution Rate Order Application to the Ontario Energy Board, November 19,2000 a) Table of Contents b) Notice from the Ontario Energy Board dated May 31, 2000 c) Manager's Summary d) Appendix "H" - Miscellaneous Charges 3. Pickering - Letter from Treasurer to Veridian dated December 28,2000 4. Veridian - Letter to O.E.B. dated December 28,2000 and received in Pickering January 2,2001 5. Memo to Treasurer dated December 28, 2000 received by January 2, 2001 attaching O.E.B. Procedural Order No.1 6. Veridian - Letter to Treasurers dated December 14, 2000 attaching Acknowledgement and Agreement in favour of Royal Bank of Canada - Prepared! Approved / Endorsed By: ~:ra4~~-- ~ Gillis A. Paterson Director, Corporate Services & Treasurer GP:vw Attachments Copy: Chief Administrative Officer Recommended for the consideration of Pickering City Council / ,/ " - - ~ VERIDIAN CORPORATION R EC f''''' ,.... " ,...,." D'" / . ~~:;. r~' .~~:f' i: I \ CITY OJ': t'i(:I<ERING ATTACHMENT#--L- TO REPORT#CiQj-OI DEe 2 2 2000 BY COURIER Ff1J r~' ~ ~ l:...t~ ! ."," ;." .... r,~::n ~ Q'O " ~ CORPORATE SERVICES 6rr":: ,; .... "." .' '~"..''.f,:~ fD)o ~ f0' ~ n ~ IE ~ Di::.,; Z a. )(j{iO 1920 B'aYI~~ lJl) [r~ ~~ ~ 0 ;oooUJJ CLERK'S DIV:~;ON Pkk:::~~~5~ ;;~ TEL 1-888-420-0070 CITY OF PICKERING PICKERING, ONTARIO December 19, 2000 FAX (905) 427-4998 eridian.on.ca :M:r. Bruce Taylor City of Pickering One The Esplanade Pickering, ON L1 V 6K7 CLERK'S DIVISION FILE NO.. - d. D FORWARD COpy TO: MAYO~_ IN;:O SYSTEMS COUN9L..____ _'" J..~t:G,n,L SERVICES CAO. t: ;""4'\.~,' BY"L.pm'''~-=1 . :-~~(~>OP i', ENG. CORP,sr;RV~; ...... ,:r!o'~:, CUI.TUrn:: g, F1ECi(~_' '=.::' ';"':"'~~L' DEV. CUST Ct\~E ...,j t ~.-:~: p::;-!", , ECON.DEVEL, SliP.-i.Y .~. ::,ERV, FIRE TRANSIT Dear :M:r. Taylor: Re: Distribution Rate Application, Veridian Connections In ,....... . Please find enclosed one copy of Veridian Connections Inco's a / . . ectricity . distribution rates. Also attached is a copy of the Ontario Energy oard's Procedural Order No.:1 wbich-'-. provides the municipal Council of Pickering 'With an opportunity to comme . .. n. ~~ \X7hile the Energy Board's procedural order provides only five days for your Council to review and comment on this material, we recognize the time constraints imposed by the holiday season. Therefore, we have extended the deadline date for comments to January 5, 2001. Our rat~ application has been prepared in accordance 'With the Ontario Energy Board's rate-setting guidelines. It provides for a one-time increase in electricity distribution rates with an average impact of 3.4% for a typical residential consumer using 1000 kWh's per month. If you have any questions regarding this material, please do not hesitate to contact me at 905-427-9870, extension 2202. - cc John Wiersma Dave Clark The power to make your community better. @ - ,If VERIDIAN CONNECTIONS The power to make your community better ~ TOREPORT#~OI"'Of ATTACHMENT#---- AMENDED DISTRIBUTION RATE ORDER APPLICATION - TO THE ONTARIO ENERGY BOARD - ED-1999-0260 NOVEMBER 14, 2000 - ,If VERlDIAN CONNECTIONS "'TTACHMENT#~ TO REPORT#CS ?J;-Dj The power 10 make your commllnily beller. TABLE OF CONTENTS - - AMENDED DISTRIBUTION RATE ORDER APPLICATION . TABLE OF CONTENTS NOTICE OF APPUCATION AND NOTICE OF WRITTEN HEARING (As directed by the Ontario Energy Board, Veridian's May 19lh Distribution Rate Order Application included the Notice of Application and Written Hearing. This Notice was posted in Veridian's service areas betweenJune 6, 2000 and June 14,2000) Return Notice from Ontario Energy Board dated May 31, 2000 MANAGER'S SUMMARY * Cover Letter .... 1. Utility Profile and Size 2. Summary of Rate Impact 3. Rate Adjustment Justification Distribution Charges Miscellaneous Charges 4. Rate Impact Mitigation Plan 5. Deviations from the Rate Handbook APPENDIX "A" ROO Design Model Veridian - Harmonized Year 1 Phase In January 1, 2001 APPENDIX "B" RVD Design Model Veridian - Ajax Service Area Year 1 Phase In January 1, 2001 - APPENDIX "C" ROO Design Model V eridian - Clarington Service Area January 1, 2001 Year 1 Phase In -- Table of Contents (cont'd) APPENDIX "I)" RUD Design Model Veridian - Pickering Service Area Year 1 Phase In APPENDIX "E" RUD Design Model Veridian - Uxbridge Service Area Year 1 Phase In - APPENDIX "F" Financial Information APPENDIX "G" PBR Related Information APPENDIX "H" Miscellaneous Charges January 1, 2001 January 1, 2001 . /' ~ VERIDIAN CONNECTIONS ATTACHMENT#d{.6)TO REPORT # C5~91-0j The power to make your community better. NOTICE FROM ONTARIO ENERGY BOARD DATED - MAY 31, 2000 ~ .-., 'I. '~. .-',."':,..... f-?~zr~ t ~:-=:=... - I . ~ V .,.1" ~~ ~~~~{~;: RP 2000 .0060 Ontario Energy Board NOTICE OF APPLICATION VERIDIAN CONNECTIONS ELECTRICITY RATE CHANGE NOTICE OF APPLICATION AND NOTICE OF WRITTEN HEARING Particulan o(The ~licarion Vendian Connections (the "Utiliry") musr unbundle electricity rates into electricity distribution ntes and nres for power and other charges in order to meet the requiremcots of new legislation. The Utility has filed its submissions with the Ontario Energy Board (the "Board") with respecr to nres for the distribution of electriciry. The Utility will, at a furure dare, file irs submission with respect 10 ntes for the pro\':ision of regulared power supply (Srandard, Supply Service or "555") and other non-competitive electricity distribution rates related to the transmission. of electriciry and sen':ices provided by the Independent Electricity 11arker Operator to the Utiliry (Hother non-competitive electricity distribution rates"). In the first phase of the proceeding ("Phase One"), the Board will approve or fix just and reasonable rates for the distribution of electricity under subsection 78(3) of the Ontario En"lJ' Board An, 1998. In one or more subsequent phases of this proceeding ("Subsequent Phases"), the Board will apprm-e or fix just and reasonable rates for 555 and other non-competitive electricity distribution rates. - The Board has issued an Electricity Distribution Rate Handbook, which stipulates that the distribution rate component of the electricity bill must be sub-divided into a fixed monthly charge and a variable charge. This rate restructuring, while h3\':ing no overall impact on the Utility's revenues, may result in individual customer rate changes. The Rate Handbook also allows a Utility to apply for a change in its distribution rates in order to earn up to a market based nte of rerum after tax. The Utility has applied for a rate of rerum of 9.88%, The adjustments would increase the Customer bill (based on 1999 rates) for an average residential customer with an annual electri~' consumption of 12,000 k'W'h by 14.6%. In order to mitigate the rate impact, the Utility has applied to phase-in the rate of rerum adjustment. For an average residential customer, the first year impact of the Utility's proposal is an increase of 4.7% instead of 14.6%. Other rate classes may also be affected by these changes. How To Participate If you wish to participate in this plOceeding you must, within 14 calendar days of the publication of this Notice, file a lener with the Board stating whether you wish to inten-ene, observe, or comment on Phase One, Subsequent Phases or all Phases of this proceeding. For information on how to intervene in, observe or comment on the submissions, please contact the Board's Customer Service Centre at 1-877-632-2727 or bl' e-mail at Boardsec{@oeb gov on ca. Please reference Boa;d file number RP-2000-0060. You may also \':isit the frequently asked questions (FAQS) section of the Board's Web site at wu~'.oeb ~ov on.ca fuaring - If no person intervenes and requests a hearing, the Board intends to dispose of the application without a hearing. If any person requests a hearing, the Board intends to proceed in this maller by way of a wrillen hearing unless the applicant or any intervenor satisfies the Board that there is good reason for not proceeding by holding a wrillen hearing. A request for a hearing must be made within 14 calendar davs of the publication of this Notice. . If the Board proceeds by u'ay of a \\"rmen hearing, aU intervenors who have registered in Phase One must file thm written submissions u-ith the Board and the L.tiliry by 4:45 p.m. within 24 calendar days of the publication of this :-':once. The Utili!)' must file any reply 10 submisSlons by 4:45 p.m. within 10 calendar days of the last day for ioren'eners ro tile written submissions. ..\11 letters of commeor must be tiled 'W':ith the Board Secretary \\-ithin 14 calendar da\'S of the publication of this :--;otice. The Board \\ill tllen consider all submissions and issue a decision and Rate Order as soon as possible. How To See The ~plicant'5 Pre-filed Evidence Copies of the submissions of \' eridian Connections are available for inspection at the Board's offices, and at rhe office of the Utili!)' in Pickering. If ,'ou intend to ioren'ene in the proceeding, the Utili!)' upon request to give a copy of its submissions with respect ro tltal phase of rhe proceeding U1 which you intend to inten'ene. IMPORTANT IF YOU DO NOT FILE .-\ LEITER or INTER\'ENTION OR _-\ LETrER OFCOllL\IENT, OR IF YOU DO NOT FILE \X'RITrEN SUBlIlISSIONS OR PRO\1DE RE.-\SONS FOR NOT HOLDING .-\ 'W'RI1TE.l\l HEARING, THE BO.-\RD lIL\Y PROCEED \\'ITHOUT YOUR P..\RTICIP.\TIOI' .\ND YOU \\'ILL NOT BE E!\.'TITLED TO .\1\:1' FURTHER NOTICE OF THE PROCEEDING. ADDRESSES: Ontario Energy Board P.O. Box 2319 2300 Yonge Street 26th Floor Toronto, ON M4P 1 E4 Attention: Paul B. Pudge Board Secretary Toll free: 1-888-632-6273 Fax: (416) 440-7656 Veridian Corporation 1920 Bayly Street Pickering, ON L 1W 3R6 Attention: David Clark Vice President Corporate Affairs Tel: (905) 427-9870 Ex!. 2209 Fax: (905) 427-4998 Dated at Toronto May 31, 2000 Ontario Energy Board Peter H. O'Dell Assistant Board Secretary \" VERIDIAN CONNECTIONS ArT ACHI'1ENT H~TO REPORT # C~^OI-/) I The power to make your community better MANAGER'S SUMMARY - Manager's Summary Page 1 of7 Manager's SUmmary Utility Profile and Size Veridian Connections Inc. was formed in the fall of 1999 through the merger of Ajax Hydro, Clarington Hydro and Pickering Hydro. The municipal shareholders of Veridian's predecessor utilities undertook this merger to provide economies of scale that would directly benefit customers. Veridian Connections Inc. continues to be wholly owned by the municipalities of Ajax, Clarington and Pickering. Shortly after the merger, Veridian submitted a successful bid to purchase the shares of Uxbridge Hydro.. The Ontario Energy Board subsequently approved this acquisition and Veridian formally assumed responsibility for serving customers in Uxbridge on June 1,2000. As a municipally owned utility, the Board and senior staff of Veridian Connections Inc. are very sensitive to the rate impacts associated with the unbundling of costs and the introduction of a market based rate of return. The evidence of this sensitivity is clearly demonstrated through a review of the rate adjustments implemented by Veridian's predecessors over the past five years. As detailed in the graph to the right, the electricity rates of Veridian's three original merger partners were decreased by a weighted average of 3.8% since 1994, while inflation as measured by the Consumer Price Index rose by 8.3%. This provided customers with a real inflation adjusted rate decrease of over 12%. These significant decreases are all the more extraordinary when it is considered that they were achieved solely through savings in the utility's operating margins; the cost of wholesale power makes up almost 90% of retail electricity rates and was frozen during this time. - . 1994 1997 1995 1996 1998 1999 j"'-Weighted Average Ratr; C~ (By #.of Curtomen) --CPI (Avenge All Items Index)j The distribution franchise area of Veridian Connections Inc. includes the entire municipalities of Ajax and Pickering, the communities of Bowmanville, Newcastle and Orono in the Municipality of Clarington, and the urban area of the Township of Uxbridge. Municipality of Uxbridge. Areas of Uxbridge and Clarington that lie outside of Veridian's franchise area are served by Ontario Hydro Services Corporation. - Manager's SUIIJJD.aJ:y Page 2 of7 Veridian currently serves approximately 62,700 residential and general service customers. A summary of customers by municipality and customer class is provided below: Customer Profile - Much of Veridian's service area lies immediately east of the City of Toronto and the Town of Markham. This close proximity to two fast growing employment centres has caused Veridian's customer base to be predominated by residential class customers. As detailed below, fully 91 % of all customers fall within this class; ustomer Class esidential eneral Service Yo Contribution evenue 0 Total Revenue 47,908,727 .44% 54,478,403 2.80% 10,974,957 10.64% 42,231,535 0.93% $ 1,271,912 1.23% $ 102,387,131 9.24% $ 46,915 .05% $ 736,672.71 % $ 103,170,717 100.00% Many residential customers have located in Veridian's service area and commute to Toronto and Markham due to the affordability of housing. A large proportion of these customers consist of young families just entering the housing market. These customers are sensitive to increases in household costs and it is the desire of the Veridian Connections Inc. Board to mitigate the impact of any rate adjustment affecting these customers. - Manager's SIlIIlmaly Page 3of7 Summary of Rate Impact Veridian Connections began operations as an LDC on November 1, 1999. Prior to this date, the customers of Veridian Connections were served by the predecessor LDC's Ajax Hydro- Electric Commission, Clarington Hydro-Electric Commission,Pickering Hydro-Electric Commission and Uxbridge Hydro-Electric Commission. The partial reporting periods during 1999 of the predecessor and current IDC's adds complexity to this rate submission. We have consolidated the financial information of Veridian and predecessor utilities to arrive at a Veridian rate base and Veridian 1999 return. Additionally, energy and cost of power information has also been consolidated to derive harmonized rates for Veridian. The methodology used to consolidate financial and energy information is explained further in this submission. Veridian Connections has outstanding Acquisition Applications to the Ontario Energy Board requesting approval of the acquisition of Port Hope Hydro and Brock Hydro and merging Belleville Utilities with Veridian Connections. We have been advised by Ontario Energy Board staff to submit our rate application without the inclusion of Port Hope and Brock Hydro-Electric Commissions and Belleville Utilities. Rate Adjustment Justification - Distribution Charges Additional revenue requirement of $13.1 million is required to achieve a market based rate of return of 9.88%. Following Ontario Energy Board Decision RP- 2000-0069, Veridian Conne~tions is proposing a first year increase of 1/3 of the revenue requirement without payments in lieu of taxes (PILS) This additional revenue will be required during this first PBR term. Veridian faces significant new expenditures as a result of deregulation. Veridian estimates $1 million per year for expenditures related to preparing for market opening. Veridian is a high growth utility. Development charges and developer contributions were the primary means of funding this growth. Prior to the Energy Competition Act and the implementation of the Distribution Service Code, Veridian collected development charges and contributions of $5.1 million per year. It would appear that most if not all of these contributions may no longer be collected. Upon market opening, Veridian will be subject to PIlS. Upon reaching the market based rate of return, Veridian will pay $3.8 million in new PIlS payments. Veridian has undergone capital restructuring with a more tax advantageous debt/equity - position. Beginning in 2001, Veridian will incur fmancing charges of $4 million in excess to previous interest expense levels. Manager's Summaxy Page 4 on Miscellaneous Charges Veridian Connections has received interim approval from the Ontario Energy Board for the harmonization of miscellaneous charges for 'distribution' activities. This interim rate order was issued on May 26, 2000 under file number EB-2000-0138. The order applies only to Veridian's service areas in Ajax, Clarington and Pickering. A copy is provided under Appendix 'H'. Subsequent to this order, Veridian has made two additional submissions to the Board that pertain to miscellaneous charges. The first was submitted on July 25, 2000 and requests interim approval for seven flat rate cost based service fees. The second, dated September 19, 2000, requests interim approval for the harmonization of the miscellaneous charges of Veridian and the former Uxbridge Hydro. Copies of these two submissions are provided under Appendix 'H'. We propose that the miscellaneous charges for 'distribution' activities as described in these three documents be approved as part of this rate application. .- With regard to miscellaneous charges for 'non-distribution' activities, we propose to continue to apply the rates approved under the transitional distribution licenses of our four predecessor utilities, until such time that the customers using these services are transferred to Veridian Energy Inc. (the retail affiliate of Veridian Connections Inc.). At this time, the charges for these services will be harmonized on the basis of a market based rate. Finally, we propose that all approved miscellaneous charges be escalated annually during the first PBR term on the basis of the Board's Input Price Index (IFI). Rate Impact Mitigation Plan Rate Phase-In Ontario Energy Board Decision RP 2000 - 0069 provides for a three year phase-in of rate increases to achieve a market based rate of return. Veridian proposes to increase rates on January 1, 2001. Subsequent rate increments would occur when the market opens to adjust for PILS impact, year 2 increase on March 1, 2002 and year 3 increase on March 1, 2003. - The following table shows the customer impact of the Veridian rate phase-in for residential customers consuming 1000 kwh per month. The market opening, year 2 and year 3 adjustments are based upon the current ROO model for illustration only. We understand that the Ontario Energy Board will be revising calculations for market opening and subsequent rate adjustments. Accordingly, this rate submission provides a rate schedule for Manager's Summaty Page 50f7 January 1) 2001. Subsequent rate adjustments will be filed following submission guidelines that will be provided by the Ontario Energy Board. Residential Custo....r Impact - 1000 kwhImonth With Proposed Harmonization effective from January 1, 2001 Ajax Clarington Pickering . Uxbridge Average Monthly Impact Monthly Impact Monthly Impact Monthly Impact Monthly Impact Current (no taxes) $ 83.05 $ 83.50 $ 80.38 $ 8213 $ 81.91 104an-01 (no tax8$) $ 84.67 2.0% $ 84.67 1.4" $ 84.67 6.3% $ 84.67 3.1% $ 84.67 3.4% Market Opening (with tax8$) $ 85.91 1.5% $ 85.91 1.5" $ 85.91 1.5% $ 85.91 1.5% $ 85.91 1.5% 1-Mar-G2 (with taxes) $ 89.89 4.B% $ 89.89 4.B" $ 89.89 4.B% $ 89.89 4.6% $ 89.89 4.B% 1-Mar ..03 (with taxes) $ 93.87 4.4% $ 93.87 4.4% $ 93.87 4.4% $ 93.87 4.4% $ 93.87 4.4% Total 13.0% 12.4% 1B.'% 14.3% 14.6% # of Residential Customers 20,369 9,n4 25,559 1,323 - There are different rate structures in place for the four distinct customer service areas of Veridian. Veridian proposes that the rates of these four communities be harmonized as of the requested rate adjustment date of January 1, 2001. The rate impact .of harmonizing to one common rate is not material. Harmonization impacts to the 1000 kwh residential customer amount to no more than an additional 1.9%. Veridian has calculated separate RUD rate designs for each of the predecessor utility service areas. Those RUD rate design models are appended in this submission. The following chart identifies the calculated rates for a 1000 kwh/month residential customer had each of the predecessor utilities filed separate rate applications to the Ontario Energy Board. Residential Customer Impact - 1000 kwhImonth Rate Impacts without Harmonization of Rates Ajax Clarington Pickering Uxbridge Average Monthly Impact Monthly Impact Monthly Impact Monthly Impact Monthly Impact Current (no taxes) $ 83.05 $ 83.50 $ 80.38 $ 82.13 $ 81.91 104an-01 (no taxes) $ 86.67 4.4% $ 86.81 4.0% $ 82.72 2.,% $ 84.32 2.7% $ 84.87 3.6% Market Opening (with taxes) $ 88.13 1.7% $ 88.31 1.7% $ 83.84 1.4% $ 85.09 0.'% $ 86.17 1.5% 1-Mar-G2 (with taxes) $ 9288 5.4% $ 93.19 6.5% $ 87.49 4.4% $ 87.57 2.,% $ 90.39 4.'% 1-Mar..o3 (with W8$) $ 97.63 5.1% $ 98.07 6.2% $ 91.13 4.2% $ 90.05 2..% $ 94.62 4.7% Total 17.6% 17.4% 13.4% 9.6% 16.6% # of Residential Customers 20,369 9,n4 25,559 1,323 - Manager's Summaxy Page 6 of7 Deviations from Rate Handbook Consolidation of Financial and Ener&>, Data Information Veridian Connections Inc. was formed on November 1, 1999 as the amalgamation of Ajax Hydro, Clarington Hydro and Pickering Hydro. On June 1, 2000 Veridian Connections Inc. acquired Uxbridge Hydro. The Veridian Connections rate submission consists of the consolidated financial and energy data information of: · Ajax Hydro for January 1,1999 to October 31, 1999 · Clarington Hydro for January 1, 1999 to October 31, 1999 · Pickering Hydro for January 1, 1999 to October 31, 1999 · Uxbridge Hydro for January 1, 1999 to December 31, 1999 · Veridian Connections for November 1 to December 31, 1999 · Veridian Corporation for November 1 to December 31, 1999 · Veridian Energy for November 1 to December 31, 1999 - Veridian Corporation and Veridian Energy are affiliated companies to Veridian Connections. Assets that would normally be considered "wires" assets were transferred to these subsidiaries. It is the long term objective that these related affiliates will charge Veridian Connections market based rates for the provision of "wires" services. The "wires" assets and expenditures transferred to Veridian Corporation and Veridian Energy have been consolidated for the purpose of determining the eligible rate base. The resulting consolidated numbers simulates the 1999 rate base and return for a hypothetical LDC utility that includes the complete 1999 operations of Ajax Hydro, Clarington Hydro, Pickering Hydro, Uxbridge Hydro, Veridian Connections and the "wires" component of Veridian Corporation and Veridian Energy. Merged Time of Use and Non Time of Use Classes The current Clarington approved rate schedule includes a time of use class for residential, general service, street lighting and sentinel lighting. It is proposed that these time of use classes be merged with non-time of use classes. The RUD models submitted include modifications to merge time of use and non-time of use classes. Rate Harmonization Submissions - Merg-er. Application. Acquisitions and Divestiture (}\fAAD) Ap-plications - Outstanding MAAD applications have been submitted for the sale of Port Hope Hydro and Brock Hydro to Veridian Connections. An application to merger Veridian Connections with Belleville Utilities was filed prior to November 7, 2000. Manager's Summary Page 7of7 Each of these acquisitions and the merger will have an impact upon Veridian distribution rates. Veridian proposes that distribution rates be fully harmonized with Brock Hydro, Port Hope Hydro and Belleville Utilities upon acquisition and merger closing dates. . Should the Ontario Energy Board approve the MAAD application for Port Hope, Brock and Belleville submissions in advance of the Veridian proposed rate increment date of January 1, 2001, Veridian will immediately amend this application to include such acquired or merged utility. - - - ,If VE RI 0 IAN CONNECTIONS ATTACHMENT#~ TO REPORT#~J'" DJ The power lo make your ("ommunity better. APPENDIX "H" MISCELLANEOUS CHARGES - - 2000 Rate Application Miscellaneous / Specific Service Charges - fF'""--"~ ....m.~.".._ on. - -r ~'-"''T'-~-~-' '" '-""-~~f"'1iF;~:.l~fr~~"'i'PF:"?fF.:1j7~'::T~"';;:j~~~~ ! i"""",~"",,_....,;;r~... " ''"~ , ...,..~... 'j i -, .........-'.,~... "'~'"~f"I'''''''-=-,",,::,"'f-rr"' """~~:L7;'""''''~-- ,-,~~:::;:.....~ '~""i'_ .....,..",,",,,.'J " t__T~~;'d'Ei'~" vf~J~!}~.( l ~~'~r".' ..Utb.~~~'1:___' ;i~'l:.1B.~~!.r~.~-."'"" L.j'~_"A_'~ ,. _ ~ ...~ ~i.._ ~{_. "~~1~~__~'-"~_"'__"~_'''4~~~_'~'U'_'lj~ ",__~~r~'~>4i~2~_~ :~~~~h~'''~i.~~~~~~~:~ Non-Distribution Activities Sentinel Light Rental; - pole $2.00 - - TBD - 30 foot pole - - - TBD - 35 foot pole .. .. .. TBD - 125 watt, Mercury Vapour - .. .. TBD .. 175 watt, Mercury Vapour $3.00 $3.25 $3.04 TBD - 250 watt, Mercury Vapour - .. $3.61 TBD .. 400 watt, Mercuraxy Vapour $3.50 $3.75 $3.76 TBD - 70 watt, HPS - - - TBD .. 150 watt, HPS - - - TBD - 250 watt HPS - - - TBD Water Heater Rental; - 40 gallon $4.50 .. $3.75 TBD - 60 gallon $5.00 .. $3.75 TBD .. 100 gallon $5.00 .. $5.75 TBD Distrution Activities Transformer Ownership Allowance - per kW $0.60 $0.60 $0.60 $0.60 * Customer Administration; - Account setup charge $8.80 $8.80 $10.35 $9.10 * - Arrears Certificate $10.70 $10.70 $10.70 $10.70 * - Dispute involvement charge $5.00 $10.00 $10.00 $7.70 * Non-Payment of Account; - Late Payment charge (%) 5.00 5.00 5.00 5.00 * .. Returned Cheque Charge - actual bank charges plu $8.55 $9.00 $9.00 $8.80 * .. Collection of Account charge $8.80 $9.00 $9.00 $8.90 * .. Reconnection . business hours $17.60 $20.00 $20.00 $18.90 * .. Reconnection - after business hours $27.80 Cost based *** $50.00 $33.90 * Service Calls; - During regular working hours $0.00 $0.00 $0.00 No charge - After business hours, Monday to Saturday $15.00 $0.00 $0.00 No charge - After business hours, Sunday and Holidays $20.00 $0.00 $0.00 No charge Temporary Service - Installation and Removal; - Where transformer not required $100.00 Cost based *** $200.00 Cost based Disconnection and Reconnect Service; - For safety reasons $0.00 $0.00 $0.00 No charge - For reasons other than safety $0.00 $0.00 $0.00 No charge Transformer Rental; - Transformer bank/kW $0.00 $0.50 $0.00 No charge - * Weighted average based on number of customers served by each of V eridian's predecessor utilities and rounded to one decimal point; Pickering: 28,266 Clarington: 10,694 Ajax: 22,138 Where cost based charges were used by a predecessor utility, that utility has not been included in the weighted average calculations. *** The transitional rate orders do not include approved charges for these items. However, the practise of the utilities was to charge a cost based rate for these services. $0.50 $0.75 $2.25 $3.10 $3.75 $4.30 $4.50 $4.50 Not applicable $0.00 $10.70 $10.00 5.00 $8.55 $9.00 $20.00 $50.00 $22.00 $0.00 $0.00 Cost based *** $5.75 $34.50 $0.00 ~ VERIDIAN CORPORATION July 25,2000 Mr. Paul B. Pudge Board Secretary Ontario Energy Board 2300 Y onge Street 26th Floor Toronto, ON M4P lE4 Dear Mr. Pudge: Re: 2000 Rate Application, Addendum No.2 Application of Flat Rate, Cost Based Service Fees 1920 Bayly Street Pickering. ON L 1 W 3R6 TEL (905) 427-9870 TEL 1-888-420-0070 FAX (905) 427-4998 www.veridian.on.ca - Your File: RP 2000-0060 Through recent discussions with the Board's :!'vIr. Martin Davies, we have been advised that Veridian Connection's current practice of charging flat rate fees for certain high volume services may'require the Board's approval. Accordingly, we are pleased to provide details regarding these practices for the Board's assessment. If it is deemed that approval is required, we request that an Interim Rate Order be granted to approve our current practices, and that these rates then be considered as part of our pending distribution rate application that is currently before the Board. Current Flat Rate Services In addition to the services referenced in Veridian Connection's approved 'Schedule of Rates and Charges', there are currently seven products and services that are provided to customers on a flat rate cost recovery basis. They are: - 1. Low voltage service connections 2. Sale of 3/0,600 volt underground service cable 3. Sale of 250 MeM, 600 volt underground service cable 4. Low voltage temporary service connection and removal 5. Temporary pole mount transformer installation and removal 6. Sale of #2 triplex overhead service conductor 7. Sale of 1/0 triplex overhead service conductor $121.50 per connection $7.00 per meter $14.00 per meter $420.56 per service $1658.88 per transformer $2.10 per meter $3.04 per meter Full descriptions of each of these products and services are provided in Appendix 'A'. The power to make your community better. @ - ~ Date: Addressee: Re: July 25, 2000 Mr. Paul B. Pudge 2000 Rate Application, Addendeum No.2 Page 2 Predecessor Utilities' Practices Veridian Connections Inc. was created in late 1999 by the merger of Ajax Hydro, Clarington Hydro and Pickering Hydro. Each of these predecessor utilities used flat rate fees for certain high volume products and services. Details are provided in Appendix 'A'. The fee structures of our predecessors were based on the principal of cost recovery. Therefore, regulatory approvalwas not deemed necessary and was not obtained by any of these utilities. Our. predecessors applied these flat rate service fees for many years, during which time Ontario Hydro conducted annual financial audits to ensure regulatory compliance. The practice of levying these fees was never questioned. Therefore, the regulator of the day implicidy approved of these practlces. "- There were two primary reasons for the use of flat rate fees for high volume services. First, it was deemed that the alternative option of charging actual costs on an individual customer basis would introduce unnecessary administrative expenses. These expenses would have to be passed on to the users of the products and services, thereby increasing overall costs to customers. Second, it was found that'customers appreciated the price certainty of a flat rate fee. The flat rate fee practices of Ajax Hydro, Clarington Hydro and Pickering Hydro continued to be used for the first several months of Veridian Connection's existence. However, on March 1, 2000, a harmonized fee structure was adopted. Harmonization of Predecessor Practices Upon the formation of Veridian Connections Inc., an extensive review of our predecessor utility practices was undertaken and policies and procedures were harmonized based on the following evaluation criteria: - . Best engineering and safety practice. . Lowest impact on customers and staff. . Equitable cost allocation to customers. . Cost effectiveness. . Best customer service and system reliability practice. The power to make your community better. ~ Date: Addressee: Re: July 25,2000 Mr. Paul B. Pudge 2000 Rate Application, Addendeum No.2 Page 3 When conducting this exercise for the flat rate services detailed in Appendix 'A', it was first determined that an extensive menu of flat rate services should be adopted as had been previously done by both Ajax Hydro and Pickering Hydro. Clarington Hydro's practice of charging actual costs on an individual customer basis for many of its services was not seen as administratively efficient due to the larger volume of transactions processed by the new, larger utility. It should be noted that Clarington Hydro's practice was appropriate for it's size; this utility was significantly smaller than either Ajax Hydro or Pickering Hydro. With the decision to adopt flat rate fees for these services, the fee structures of Ajax Hydro and Pickering Hydro were evaluated to determine which most accurately reflected the costs of delivering these services. While historical cost data was not available to assist in this assessment, the calculated costs of delivering each service indicated that Ajax Hydro's fee structure was preferable. These calculated costs are detailed in Appendix 'B', - On the basis of this evaluation, it was decided to adopt Ajax Hydro's flat rate service practicje for all product and service categories, and to adopt its fee structure for 'Low voltage service connections', Low voltage temporary service connections and removals', and 'Temporary pole mount transformer installations and removals'. The fees for the remaining categories, all of which apply to the sale of overhead conductor and underground cable, were set based on current inventory costs plus applicable overheads. As stated previously, the new fees were implemented on March 1,2000. Proposed Accounting Treatment It is recognized that the adoption of the Ajax Hydro fees may not fully reflect the true average cost of service delivery for Veridian Connection's larger service area. To ensure that the principal of cost recovery is adhered to, it is our intention to implement the following accounting procedures: · A variance account will be maintained for each flat rate fee to track the difference between revenues and related expenses over time. - · The flat rate fees will be updated annually to reflect the actual average cost of providing the related product or service during the previous twelve months, plus an adjustment to clear the variance account. The variance account clearance adjustment will be based on the transaction volumes of the prior year. The power to make your community better. wf Date: AddIessee: Re: July 25, 2000 Mr. Paul B. Pudge 2000 Rate Application, Addendeum No.2 Page 4 Summary Veridian Connections has implemented flat rate fees for a number of high volume product and service transactions. This practice is consistent with those of the company's predecessor utilities, and is being conducted on the basis of full cost recovery. Accounting procedw:es are being put in place to ensure that the principal of cost recovery is adhered to. The use of flat rate fees for these products and services is in the best interests of the customers of Veridian Connections for two reasons. First, this practice is much more administratively efficient and therefore less costly than the alternative of charging individual customers the actual costs for product and service delivery. Second, it has been ow: experience that customers appreciate the cost certainty of flat rate fees. _ It is our understanding of the Rate Handbook that Board approval of such fees is not required as long as they are levied on the basis of cost recovery for the provision of one-time services. We believe that the services referenced in this submission meet these criteria. 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VI o u e- B c: Il.l ::- ,S Il.l M C':l [l ::- C':l M ,S ::- o E ..... c: Q.I ... ... ::: u c: o "'0 Il.l en C':l .c Il.l "" C':l e- "'0 c: C':l \0 .,.;- N~ E .~ ... <.8 c: e: o ...0 en en Il.l en c: Q.I 0.. >< Q.I ~ ... Il.l ..... C':l E Q.I F -.i E .~ ... c2 c:: e: o ...c VI VI Il.l VI c:: Il.l 0.. ><: Il.l ~ ..... ... ~ C':l E "'0 c:: C':l ... ::: o .c ~ Il.l F ,. ~ VERIDIAN CORPORATION 1920 Bayly Street Pickering, ON L 1 W 3R6 September 19,2000 TEL (905) 427-9870 TEL 1.888.420-0070 BY COURIER FAX (905) 427-4998 www.veridian.on.ca Mr. Paul B. Pudge Board Secretary Ontario Energy Board 2300 Y onge Street 26th Floor Toronto, ON M4P1E4 Dear Mr. Pudge: - Re: 2000 Rate Application, Addendum No.3 Harmonization of Charges - Veridian Connections Inc./U xbridge Hydro Pursuant to the Board's Order of May 19, 2000 in which leave is granted for Veridian Connections Inc. to purchase the shares of 1382153 Ontario Inc. (previously Uxbridge Hydro), we hereby request that an Interim Rate Order be granted to: . Authorize the harmonization of the miscellaneous charges of Veridian Connections Inc. and Uxbridge Hydro, and; . Apply Veridian Connections Inco's proposed 'Flat Rate Cost Based Service Fees' to customers in the former franchise area of Uxbridge Hydro. These fees are detailed in a submission to the Board dated July 25, 2000 and filed under RP 2000-0060. A decision by the Board on this submission is pending. Harmonization of Miscellaneous Charges On May 26, 2000, Veridian Connections Inc. received an Interim Rate Order from the Board authorizing the harmonization of the miscellaneous charges of Ajax Hydro, Clarington Hydro and Pickering Hydro. The charges approved under this order were based on a weighted average of the miscellaneous charges of these three predecessor utilities. - The power to make your community better. @ ~ Date: Addressee: Re: September 19, 2000 Mr. Paul B. Pudge 2000 Rate Application, Addendum No.3 Page 2 If the same methodology for harmonizing the miscellaneous charges of Veridian Connections Inc. and Uxbridge Hydro were employed, the resultant charges would be as detailed in column A of the table in Appendix 'A'. Veridian Connections Inc.'s current approved charges are provided in column B. Due to the small number of customers served by the former Uxbridge Hydro, the new weighted average miscellaneous charges do not deviate significantly from Veridian Connections Inc.'s current charges. In fact, the change is material for only two services; . The 'Account Setup' charge, which would be $.30 less under the weighted average approach, and; . The 'Reconnection, After Business Hours' charge, which would be $.60 greater under the weighted average approach. - In view of these relatively minor discrepancies, we request that authorization be given to extend Veridian Connections Inc.'s current approved miscellaneous charges to the franchise area previously served by Uxbridge Hydro. We believe this to be in the best interests of customers, as it will avoid the need for a second miscellaneous charge adjustment for Veridian Connection's customers in Ajax, Clarington and Pickering. Flat Rate. Cost Based Service Fees Veridian Connections lnc.'s current practice of delivering certain high volume services on a cost based, flat rate fee basis is described in its submission to the Board dated July 25, 2000. Acknowledgement that these practices comply with the Board's regulatory guidelines is sought and, if necessary, an Interim Rate Order approving the current flat rate fees is requested. The current fees and services detailed in this submission are as follow: 1. Low voltage service connections 2. Sale of 3/0, 600 volt underground service cable 3. Sale of 250 MCM, 600 volt underground service cable 4. Low voltage temporary service connection and removal 5. Temporary pole mount transformer installation and removal 6. Sale of #2 triplex overhead service conductor 7. Sale of 1/0 triplex overhead service conductor $121.50 per connection $7.00 per meter $14.00 per meter $420.56 per service $1658.88 per transformer $2.10 per meter $3.04 per meter _ As all of these fees are based on the cost of delivery, it is appropriate that they also be applied in the franchise area previously served by Uxbridge Hydro. Therefore, we request that, if Board approval is The power to make your community better. ~ Date: Addressee: Re: September 19, 2000 Mr. Paul B. Pudge 2000 Rate Application, Addendum No.3 Page 3 deemed necessary for these fees, an Interim Rate Order be issued authorizing their application in all ofVeridian Connections Inc.'s service areas, including the Township ofUxbridge. Thank you for your consideration of this submission. Do not hesitate to contact me should you require further information regarding our application of these service charges. I can be reached at 905-427-9870, extension 2202. .T.,B.A.S. Hairs and Key Projects - cc Martin Davies, Ontario Energy Board Axel Starck ] ohn Wiersma Dave Clarke Rob Scarffe "- The power to make your community better. Appendix" A" ,- 2000 Rate Application. Addendum No.3 Miscellaneous/Specific Service Charges Non-Distribution Activities Sentinel Light Rental; TBD TBD - pole $2.00 - 30 foot pole $0.50 TBD TBD - 35 foot pole 50.75 TBD TBD - 125 watt, Mercury Vapour $2.25 TBD TBD - 175 watt, Mercury Vapour $3.00 53.25 $3.04 $3.10 TBD TBD - 250 watt, Mercury Vapour $3.61 TBD TBD - 400 watt, Mercurary Vapour 53.50 $3.75 $D6 $3.75 TBD TBD - 70 watt, HPS $4.30 TBD TBD - 150 watt, HPS $4.50 TBD TBD - 250 watt HPS $4.50 TBD TBD Water Heater Rental; - 40 gallon $4.50 $3.75 TBD TBD - 60 l,>allon $5.00 $3.75 TBD TBD - 100 gallon $5.00 $5.75 TBD TBD Distrution Activities Transformer Ownership Allowance - per kW $0.60 $0.60 $0.60 Not applicabl $0.60 $0.60 Customer Administration; - Account setup charge $8.80 $8.80 $10.35 $0.00 $8.80 $9.10 - - Arrears Certificate $10.70 $10.70 $10.70 $10.70 $10.70 $10.70 - Dispute im'olvement charge $5.00 $10.00 $10.00 $10.00 $7.70 $7.70 Non-Payment of Account; - Late Payment charge (%) 5.00 5.00 5.00 5.00 5.00 5.00 - Returned Cheque Charge - actual bank charges plu' $8.55 59.00 $9.00 $8.55 $8.80 $8.80 - Collection' of Account charge $8.80 $9.00 $9.00 $9.00 $8.90 $8.90 - Reconnection - business hours $17.60 $20.00 $20.00 $20.00 $18.90 $18.90 - Reconnection - after business hours 527.80 Cost based *** $50.00 550.00 $34.50 $33.90 Service Calls; - During regular working hours $0.00 $0.00 $0.00 $22.00 No charge No charge - l\fter business hours, Monday to Saturday $15.00 $0.00 $0.00 $0.00 No charge No charge - After business hours, Sunday and Holidays $20.00 $0.00 SO.OO 50.00 No charge No charge Temporary Service - Installation and Removal; - Where transformer not required S100.00 Cost based *** $200.00 Cost based *** Cost based Cost based Disconnection and Reconnect Service; - For safety reasons SO.OO SO.OO $0.00 55.75 No charge No charge - For reasons other than safety SO.OO $0.00 $0.00 $34.50 No charge No charge Transformer Rental; - Transformer bank/kW SO.OO $0.50 $0.00 $0.00 No charge No charge * Weighted average based on number of customers served by each of V eridian's predecessor utilities and rounded to one decimal point; Pickering: 28,266 Clarington: 10,694 Aja.\:: 22,138 Uxbridge: 1,608 Where cost based charges were used by a predecessor utility, that utility has not been included in the weighted average calculations. n* 111e transitional rate orders do not include approved charges for these items. However, the practise of the utilities was to charge a cost based ratc for thesc sen'1ces. - Cit.ij a# - !-'JTACHMENT # L TO REPORT #~J -01 Pickering Ovic Comple One The Esplanad Pickering. Ontari. Canadi L1V 6I<: Direct Access (905) 420-4661 cityofpickering.coII CORPORATESERWCESDEPARTMENT Department (905) 420-4634 Facsimile (905) 420-5313 corpserv@city.pickering.on.ca BY FAX ONLY December 28, 2000 :Mr. George Armstrong Manager of Regulatory Affairs and Key Pojects Veridian Corporation 1920 Bayly St. Pickeririg, Ontario Ll W 3R6 Dear Mr. Armstrong: - I am in receipt of your letter of December 19, 2000 in regards to Distribution Rate Application, Veridian Connections Inc. Having received this at approximately noon on Friday, December 22, 2000 I am only now addressing this matter after the Christmas break. Your memo indicates that a copy of the Ontario Energy Hoard's Procedural Order No. lis attached. Unfortunately I was unable to [md it in the attached material and ~ould appreciate a copy so that I may understand the context in'which it is expected that the Council'ofthe City of Pickering is to comment. Your letter then goes on to state that while we only have five days for review and comment that ".. .that in consideration of the Holiday Season we have extended the deadline date for comments to January 5, 2001". Given that this is still a very tight time frame in the context of the Christmas and New Years holidays, I would appreciate your advice as to whether the "we" in this sentence refers to the Ontario Energy Board or V eridian or both and how this date may be further' extended. I should advise that the Executive Committee of the City of Pickering will be meeting on Monday, January 8 and the Council on Monday, January 15 and comments may not be available beforehand. A response at your earliest opportunity would be appreciated. GAP:vw Yours verytru~ . --->~~0.~-~ Gillis A. Paterson, Director, Corporate Services & Treasurer - Copy: W. Arthurs, Mayor Members of Council T.J. Quinn, Chief Administrative Officer J. Wiersma, President and CEO, Veridian Corporation D. Clark, Vice President of Corporate Affairs 01/02/01 16:54 '5'905 619 0210 VERIDIAN ~~~ FINANCE DEPT- l4J 002/002 ~ VERlDIAN CORPORATION ENT#.-:i- TO REPORT#.c.t.oI.o01 1920 Bayly Street December 28, 2000 Pickering, ON l1W 3R6 TEL (905) 427-9870 TEL 1-888-420-0070 BY COURIER AND FACSIMILE FAX (905) 427-4998 Ontario Energy Board P.O. Box 2319 2300 Y onge Street 26th Floor Toronto, ON M4P lE4 www.veridian.on.ca Attention: Mr. Peter O'Dell, Assistant Board Secretary Dear Sir: Re: Distribution Rate Application Procedural Order Number 1 Veridian Connections Inc. - We have responded to Procedural Order No.1 advising the council of the municipal corporations within Vendian's service area that they may file written representations to the Board. The Procedural Order was received by Veridian on December 10, 2000 asking for a response by the municipalities by December 12,2000. We appreciate the urgency placed by the Board in processing our rate application, however, a number of the municipalities have responded that they cannot respond until after their next Council meetings. Therefore, on behalf of dl.e municipal cOlporations of Ajax, Clarington, Pickering and Uxbridge we would request an extension for the municipalities to provide written submissions to January 10, 2001. Veridian will file responses to the municipality written submissions, if any, by January 12, 2001. Davi Chu:k, CMA Vie President, COlpoJ:ate Affairs CC Ms. Patti Battie, Municipality of Clarington MI. Marty DeRond, Town of Ajax 1v1r. Bruce Taylor, City of Pickering Mr. Walter Taylo!, Township of Uxbridge J OM Wiersma, President and CEO George Armstrong, Manager of RegulatOlY Affairs - The power to make your community better. ~ "r, -;.-<..~i!.(z @ \ . ATTACHMENT#~TOREPORT# e.s 0/-0, -. 12/2..9/00 12:36 '5'905 619 0210 RI!!!- . 0,.,.4; CIS y o~ p I liS' ~ 001/006 J4N 0 ICIr~I1II11i Co . 2 200/ ~PoIt4 ~ S~,qlllC. M E M 0 RAN D U lYies VERIDIAN .~ VERrD IAN CORPORATION To: Mr.Gil Paterson, Treasurer c: J. Wiersma, G. Armstrong City of Pickering From: David Clark Date: December 28, 2000 Re: Ontario Energy Board Procedural Order - George Annstrong sent a letter to municipal clerks 011 December 19th advising that municipalities my file written submissions to the Ontario Energy Board with respect to Veridian's revised application. The procedural order from the Ontario Energy Board is attached which I Wlderstand was missed as an attachment in George's letter. The timeline was unrealistic for the municipalities to respond. Veridian received the procedural order on December the lOth and the municipalities were to respond in writing by December the 1 zth. I enclose a letter that I have issued by facsimile to the Ontario En~rgy Board today asking for an extension to January loth for the mUnicipalities to provide written submissions on Veridian revised rate application. I would appreciate it if you could provide your written comments, if any, to the Ontario Energy by January 10,2001. Yours truly, (i~oJ J ~Vid Clark, ~ Vice President, Corporate Affairs. Ene!. - 12./29/00 12:36 '5'905 619 0210 VERIDIAN ~ 002/006 - ,;, Ontario Energy Board P.O. Box 2319 2300 Yonge Street 26th Floor Toronto ON M4P 1 E4 Telephone: (416) 481-1967 Facsimile: (416) 440-7656 Commls.lon de l'Energle de !'Ontarlo C.P.2319 2300. rue Yonge 26" etage Toronto ON M4P 1 E4 Telephone: (416) 481-1967 Telecopleur: (416) 440-7656 ~t1 ....." On1ano / December 7, 2000 Mr. John Wiersma Presidfmt and CEO Veridian Connections Inc. 1920 Bayly Street Pickering, Ontario L 1W 3R6 Dear Mr. Wiersman: {~ Ae: Veridian Connections - Revised Distribution Rate Application :Board File No.' RP-200Q-0060 The Board has today issued its Procedural Order No. 1 in the above matter and an executed copy is attached. e r H. O'Dell A sistant Board Secretary Encls: cc: All Intervenors - /f ,I' Ce... -~ :J .~v leiS fl\Ov on~;I'(l\ ~ G .Arlf1b1fo0j --- . , 12/29/00 12:37 '5'905 619 0210 VERIDIAN I4J 003/006 Ontario Energy Board CommIssIon de 1'5nergle de "Ontario ~ ~ Ontario RP-2000-0060 IN THE MATTER OF the Ontario Energy Board Act, 1998, S.O. 1998, c.15 (Sched. B); AND IN THE MATTER OF an Application by Veridian Connections Inc. for an order or orders approving or fixing just and reasonable rates. - PROCEDURAL ORDER NO.1 Veridian Connections Inc. ("Veridian") filed with the Ontario Energy Board ("the Board") an Application (..the Application") dated May 19,2000 for an order or orders approving or fixing just and reasonable rates and other charges for the distribution of electricity commencing July 1, 2000. The Board iss}led its Decision with Reasons in the proceeding RP-2000-0069 on September 29,2000, concerning certain matters relating to the June 7,2000 Directive by the Minister of Energy, Science and Technology. On September 29, 2000, the Board -also issued a Letter of Direction to Licensed Distribution Utilities which directed utilities to file, or in the case of utilities with Applications pending before the. Board, to re-file applications for unbundled rates no later than November 30, 2000. On November 3, 2000, the Board issued its revised Electricity Distribution Rate Handbook - which indicated that utilities re-filing applications should also submit copies of their revised applications to all intervenors of record. , _.._,_qL~!t/OO 12: 38 '5'905 619 0210 VERIDIAN ~ 004/006 -- Ontario Energy Board -2- Vendian re-filed with the 'Board a Revised Rate Application ('~the Revised Application") dated November 14,2000, for anor<ler or orders approving or fixing just and reasonable rates and other charges for the distribution of electricity commencing January 1,2001. The Revised Application confirms Veridian' s election of a 9.88% Target Rate of Return on Common:Equity. The Application reflects an incremental revenue of $3;098,663 for 200 1 which is one third of the amount 'required to achieve the elected Target Rate of Return on Common Equity, exclusive of Payment in Lieu of Taxes. The rates proposed would be effective no earlier than January 1, 2001. :The Revised Application also states tbat, for residential customers consuming 1,.000 kWh per month, the percentage increase in their total bill in the first year of the rate. mitigation plan is 3.4%. - The Board intends to proceed with the Revised Application for the RP-2000-0060 proceeding <by way of a written hearing. THE:BOAJID ORDERS 'I'HA T: 1. The Applicant shall forthwith provide a copy of the Revised Application to the council of the municipalcorporatlon or municipal corporations within the Applicant's service area. 2. In accordance with the Minister's Directive dated June 7,2000, the Applicant shall inform the council ofthe municipal corporation or corporations within the Applicant's service area that they may file written representations to the Boar:d with respect to the Revised Application by December 12,2000. - 3. Intervenors shall file submissions, if any, with respect to the Revised Application by December 13, 2000. . 1~/29/00 12:38 e905 619 0210 VERIDIAN 14I 005/006 .-. Ontario Energy Board -3- 4. The Applicant shall file reply comments, if any, to any representations of a councilor submissions of intervenors, by December 28, 2000. 5. All filings to the Board noted in this Order must be in the form off) bard copies and received by the Board by 4:45,D.m. on the stated dates. The Board requests that all parties make every effort to include a copy of their filings on disk, in WordPerfect format, along with the hard copies which are filed. Each party must send its submissions to all other parties as well as to the Board. ISSUED at Toronto, December 7, 2000. - ONT ARlO ENERGY BOARD - , ~ . .IZ/29/00 12:39 - - - '5'905 619 0210 VERIDIAN RP-200o-0060 VEAIDIAN CONNECTIONS INC. ELECTRICITY RATE CHANGE APPLICANT & LIST OF INTERVENTIONS Applicant Veridian Connections Inc. Reporting Service StenoTran 1. Intervenors Residential Customers of Durham Region 2. Hydro One Networks Inc. ~ 006/006 June 27, 2000 Rep. and Address for Service Mr. John Wiersma President and CEO Veridian Connections Inc. 1920 Bayly Street Pickering, Ontario L 1 W 3A6 Tel: 905.427-9870 Fax: 905-427-4998 Rep. and Address for Service Mr. Bill Curley StenoTran 2450 Lancaster Road Suite 11 Ottawa, Ontario K1B 5N3 Tel: 1.613-521-0703 Fax: 1-613-521-7668 Rep. and Address for Service Mr. Whitland S. Coward No. 7 Foord Road Ajax, Ontario L 1 S 1 K6 Tel: Fax: 905-428-9250 Glen MacDonald Senior Advisor - Regulatory Review Hydro One Networks Inc. 13th Floor, North Tower 483 Bay Street Toronto Ontario M5G 2P5 Tel: 345-5913 F=:::I'J{' 345-5866 - BORDEN LA 0 N E R GERVAIS - - ATTACHMENT#L TO REPORT#{!$ Ol..ot Bqrden lad.ner Gervais.llP lawyers '.Patent& Trade-:markAg~nts Scotia Plaza, 40 King Street \/Vest TQronto, Ontario, Canada M5H 3Y4 tel.: (416) 367-6000 fax: (416}36H749 WWN.blgcanada.com December 14, 2000 RICHARD J. MORELLI direct tel.: 416-367-6197 direct fax: 416-361-7343 e-mail: rmorelli@blgcanada.com BY COURIER PRIVATE AND CONFIDENTIAL -:'J Mr. G. D. Kirkbride Director of Finance Town of Ajax 65 Harwood Avenue South Ajax, Ontario Ll S 2H9 Ms. Marie Marano Treasurer Municipality of Clarington 40 Temperance Street Bowmanville, Ontario LIC 3A6 OJ > ::I o .... C to > - and - o - Mr. G. A. Paterson Director of Finance and Treasurer City of Pickering Pickering Civic Complex One The Esplanade Pickering, Ontario LI V 6K7 c o ... o !- to ;: to o Ladies and Gentlemen: Re: Veridian Connections Inc. ("Connections") and Veridian Corporation ("Veridian") Promissory Notes and Royal Bank Financing - to -OJ ... - c o :E We enclose for execution by your respective municipalities four (4) copies of an Acknowledgement and Agreement for each ofthe two promissory notes held by each of your municipalities to be made in connection with the extension of credit by the Royal Bank of Canada (the "Bank") to Connections and Veridian. The Bank has requested the execution of the enclosed documents prior to advancing funds to Veridian and Connections. c o "'C C o ..... Please arrange for the execution of all the enclosed documents and deliver three (3) of the four (4) copies of each document to Mr. David Clark, Vice-President, Corporate Affairs, Veridian Corporation at the following address: >- ... to DO to U -tVi"L PRO.... ri"".\ " . z ~ ~ j "'0 C' ;O,*J~J~"ii - 1920 Bayly Street Pickering, Ontario L1 W 3R6. If you have any questions or concerns relating to the enclosed documents, please do not hesitate to contact Mr. David Clark at 905-427-9870 or the undersigned. We would be pleased to discuss them with you. Yours very truly, GERVAIS LLP . ard J. Morelli RJM/ar EncIs. cc: M. de Rond, Ajax (By fax) (w/o encIs.) B. Taylor, Pickering (By fax) (w/o encIs.) P. Barrie, Clarington (By fax) (w/o encIs.) D. Clark, Veridian Corporation (By fax) (w/enc1s.) S. Lutz, BLG - ::ODMA IPCDOCS\CCT\162737\1 .- Page 2 - ACKNOWLEDGEMENT AND AGREEMENT TO: ROYAL BANK OF CANADA (the "Bank") RE: Promissory Note (the "Promissory Note") dated November 1, 1999 in the principal amount of $7,095,000 issued by Veridian Corporation ("Veridian") to The Corporation of the City of Pickering ("Pickering") Veridian and Pickering hereby acknowledge (i) the terms and conditions of the Promissory Note and (ii) that the Bank is prepared to extend credit facilities to Veridian in reliance on such terms and conditions. Further, Veridian and Pickering hereby agree until all amounts owed by Veridian to the Bank have been paid (i) to be bound by the terms of the Promissory Note including but not limited to section 3 thereof, and (ii) not to amend the terms of the Promissory Note without the prior written consent of the Bank. Dated at , Ontario this _ day of December, 2000. THE CORPORATION OF THE CITY OF PICKERING - By: Name: Title: Wayne Arthurs Mayor CIS By: Name: Title: Bruce Taylor Clerk VERIDIAN CORPORATION By: Name: John Wiersma Title: President CIS - By: Name: James 1. Mason Title: Director - ACKNOWLEDGEMENT AND AGREEMENT TO: ROYAL BANK OF CANADA (the "Bank") RE: Promissory Note (the "Promissory Note") dated November 1, 1999 in the principal amount of $17,974,000 issued by Veridian Connections Inc. ("Connections") to The Corporation of the City of Pickering ("Pickering") Connections and Pickering hereby acknowledge (i) the terms and conditions of the Promissory Note and (ii) that the Bank is prepared to extend credit facilities to Connections in reliance on such terms and conditions. Further, Connections and Pickering hereby agree until all amounts owed by Connections to the Bank have been paid (i) to be bound by the terms of the Promissory Note including but not limited to section 3 thereof, and (ii) not to amend the terms of the Promissory Note without the prior written consent ofthe Bank. Dated at , Ontario this _ day of December, 2000. THE CORPORATION OF THE CITY OF PICKERING - By: Name: Title: Wayne Arthurs Mayor CIS By: Name: Bruce Taylor Title: Clerk VERIDIAN CONNECTIONS INC. By: Name: John Wiersma Title: President CIS - By: Name: James 1. Mason Title: Director