Bill 210: Moving Forward Moderator: Andrew Johnson Panel: - Greg Baden: Coral Energy - Linda Bertoldi: Borden, Ladner, Gervais (IPPSO) - Henry Wegiel: Dofasco - Mike McGee: Energy Profiles (Commercial Consumers) - Bruce Campbell: IMO - Chris Buckler: Enersource, Hydro Mississagua Toronto Congress Centre Document ID: MAC-03-06

Implications of Bill 210 for Wholesale Marketers  Loss of confidence and increased uncertainty Large Consumers  Larger consumers do not need and should not be covered by the price cap. The existing MPMA rebate does provide protection from price volatility. Next Steps  Positive steps need to taken to restore confidence quickly  Commitment by the Government to an open competitive wholesale market  Provide the mandate, resources and independence to the OEB and IMO to operate a fair open market  Continued progress on the decontrol of OPG generation  Transition plan to bring the small consumer load back into the market on or before 2006 A SHELL TRADING COMPANY Market Advisory Committee Meeting February 18, 2003 (Greg Baden)

BILL MAJOR ISSUES IPPSO (Linda Bertoldi) To respond to Bill 210 impacts, the following are needed:  Clear and Stable Government Energy and Environmental Policy  Preservation of Wholesale and Retail Contract Markets  Resolution of Resource Adequacy Issues  Clear assignment of responsibility and means to implement/incent supply  Short and long term issues to ensure adequate supply need to be addressed  Planned Transition to End of Price Freeze in 2006

Bill 210: Large User Perspective (Henry Wegiel) For deregulation to be successful, it must benefit consumers Bill 210: Increase in consumer cost risk Consumers will benefit from a properly functioning wholesale market –Restore market confidence –Support hedge market liquidity –No cross-subsidy –MPMA rebate certainty –Appropriate incentives for efficient generation –Continue IMO MEP –Plan to introduce competition in generation supply

Commercial Consumers ( Mike McGee) Rough Numbers: 38% of load; 350,000 accounts ‘Small’ = 9% of load; 300,000 accounts ‘Large’ = 29% of load; 50,000 accounts MUSH and Multi-Res ‘designated’ Extend 4.3 cents to rest of market? YES – equity amongst consumers NO – preserve what is left of market Stuck in limbo – spot prices, cannot forward contract Retailers ready, although some casualties. Demand response capability: emerging, but now stalled; need better price predictability.

Negative Financial Impact $500 million (approx.) Variance Accounts Un-Recovered –imported commodity/uplifts, system investments Distribution Rates Frozen to 2006 –3 rd Phase of Commercial Return? –Minister now “gatekeeper” to OEB on rate applications (strict criteria) Implications of Bill 210 on Ontario’s LDC Industry (Chris Buckler)

Negative Financial Impact Bill Standardization and Rate Review Commissioned –Bill changes expected –Rate impacts? Shareholder Resolution Required to Retain “For-Profit” Status –Zero-Return is not “Non-Profit” Unfunded Costs Building / Looming –Wholesale Meter Seal Expiry / Replacement –DSM, ESA Code, Bill Changes, accelerated PCB phase-out

Key Questions Is 210 sustainable to 2006? –EDA’s “Beyond 210” project What market design /structure comes next? How will retail prices be set? How will commodity risk be managed? What role will LDCs play? –“Pass-through” vs. ???

Enersource’s Position on New Market 80% of customers stayed with Distributors. But they didn’t want spot prices. LDCs were forced to provide spot prices;mistake. Nov. 11 gave customers what they wanted. New market should recognize customer needs. LDCs can provide fixed prices (Gas utilities). LDC contracts will strengthen forward market for electricity and stimulate generation investment.

IMO Market Sponsorship Reliability Adequacy –Price Responsive Demand –Emergency Demand Response –Investment Security –Operations –Outage Management –Information Competitive Markets Price Discovery – Liquidity – Transparency – Ease of Entry/exit Effective Instruments – Spot Market – Contracts – Forward Markets – etc. Usability Level Playing Field Fairness Compliance Surveillance For The Benefit of Consumers