HomeMy WebLinkAboutCS 01/01
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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
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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
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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
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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.
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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:
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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
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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
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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 / ,/
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VERIDIAN
CORPORATION
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CITY OJ': t'i(:I<ERING
ATTACHMENT#--L- TO REPORT#CiQj-OI
DEe 2 2 2000
BY COURIER
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CORPORATE SERVICES 6rr":: ,; .... "." .' '~"..''.f,:~
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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'~:,
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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.
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cc
John Wiersma
Dave Clark
The power to make your community better.
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VERIDIAN
CONNECTIONS
The power to make your community better
~ TOREPORT#~OI"'Of
ATTACHMENT#----
AMENDED DISTRIBUTION RATE ORDER
APPLICATION
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TO
THE ONTARIO ENERGY BOARD
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ED-1999-0260
NOVEMBER 14, 2000
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VERlDIAN
CONNECTIONS
"'TTACHMENT#~ TO REPORT#CS ?J;-Dj
The power 10 make your commllnily beller.
TABLE OF CONTENTS
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AMENDED DISTRIBUTION RATE ORDER
APPLICATION
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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
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APPENDIX "C"
ROO Design Model V eridian - Clarington Service Area January 1, 2001
Year 1 Phase In
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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
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APPENDIX "F"
Financial Information
APPENDIX "G"
PBR Related Information
APPENDIX "H"
Miscellaneous Charges
January 1, 2001
January 1, 2001
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VERIDIAN
CONNECTIONS
ATTACHMENT#d{.6)TO REPORT # C5~91-0j
The power to make your community better.
NOTICE FROM ONTARIO ENERGY BOARD
DATED
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MAY 31, 2000
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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.
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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
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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
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VERIDIAN
CONNECTIONS
ArT ACHI'1ENT H~TO REPORT # C~^OI-/) I
The power to make your community better
MANAGER'S SUMMARY
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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.
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.
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.
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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
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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.
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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
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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.
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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.
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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
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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
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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
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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. However, 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.
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, extensio 2202.
Yours tru\y,
\~~~(\,~~ :-
.. ,!\ ; I
'Z! ..\ i I
, " .
; ,
George Armstr ng, C.E.T., .kS.
Manager of RegWatory Affairs and K.ey Projects
~-,.
cc
Martin Davies, Ontario Energy Board
Axel Starck
John Wiersma
Dave Clarke
Peter P etriw
Bill Harper, Hydro One Networks Inc.
Whitland S. Coward
-
The power to make your community better.
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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
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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
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Mr. G. A. Paterson
Director of Finance and Treasurer
City of Pickering
Pickering Civic Complex
One The Esplanade
Pickering, Ontario
LI V 6K7
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Ladies and Gentlemen:
Re:
Veridian Connections Inc. ("Connections") and Veridian Corporation
("Veridian") Promissory Notes and Royal Bank Financing
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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.
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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:
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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
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::ODMA IPCDOCS\CCT\162737\1
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Page 2
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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
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By:
Name:
Title:
Wayne Arthurs
Mayor
CIS
By:
Name:
Title:
Bruce Taylor
Clerk
VERIDIAN CORPORATION
By:
Name: John Wiersma
Title: President
CIS
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By:
Name: James 1. Mason
Title: Director
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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
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By:
Name:
Title:
Wayne Arthurs
Mayor
CIS
By:
Name: Bruce Taylor
Title: Clerk
VERIDIAN CONNECTIONS INC.
By:
Name: John Wiersma
Title: President
CIS
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By:
Name: James 1. Mason
Title: Director