Consumers Coalition of Alberta

Decision 22157-D01-2017 Decision on Preliminary Question AltaLink Management Ltd. 2012-2013 Deferral Account Reconciliation Costs Award February 15, 2017

Alberta Utilities Commission Decision 22157-D01-2017 Decision on Preliminary Question AltaLink Management Ltd. 2012-2013 Deferral Account Reconciliation Costs Award Proceeding 22157 Application 22157-A001 February 15, 2017 Published by the: Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. Calgary, Alberta T2P 3L8 Telephone: 403-592-8845 Fax: 403-592-4406 Website: www.auc.ab.ca

Contents 1 Decision... 1 2 Introduction... 1 3 Background... 3 4 The Commission s review process... 5 5 Grounds for review and hearing panel findings... 7 6 Review panel findings... 10 6.1 FTI costs award... 10 6.1.1 Amounts above the Scale of Costs... 10 6.1.2 Devoted a considerable amount of time and resources to matters that the Commission ultimately determined did not represent a significant concern.. 11 6.1.3 Qualifications of various consultants... 12 6.1.4 Unsupported overlap in functions... 13 6.1.5 Requirement of Mr. Mohr and Mr. Tusa to both attend the oral hearing... 15 6.2 Grid Power costs award... 15 6.2.1 Compliance with the new ISO Rule 502.2 and failure to address Commission finding s in Decision 2014-283... 15 6.2.2 Failed to justify the hours spent preparing his evidence... 18 6.3 Previously unavailable facts... 19 6.4 Further submissions in support of the review application... 20 7 Decision... 22 List of tables Table 1. FTI and Grid Power costs... 5 Table 2. Grid Power activity... 9 Decision 22157-D01-2017 (February 15, 2017) i

Alberta Utilities Commission Calgary, Alberta Decision on Preliminary Question AltaLink Management Ltd. Decision 22157-D01-2017 2012-2013 Deferral Account Reconciliation Costs Awards Proceeding 22157 1 Decision 1. In this decision, the Alberta Utilities Commission must decide whether to grant an application filed by the Consumers Association of Alberta (CCA) requesting a review and variance of Commission Decision 21498-D01-2016 1 (Decision). The Decision addressed applications from AltaLink Management Ltd. (AML) and the CCA for approval and payment of their respective costs to participate in AML s 2012-2013 deferral account reconciliation (direct assign capital deferral account (DACDA)) proceeding (Proceeding 3585). The CCA s review application concerned findings in the Decision regarding the disallowance of a portion of the costs claimed for the services provided by FTI Consulting Inc. (FTI), and for Grid Power Development and Design Inc. (Grid Power), both consultants retained by the CCA in Proceeding 3585. 2. The Commission has decided to deny the review application for the reasons provided below. 2 Introduction 3. On November 7, 2016, the Commission received an application (review application) from the CCA requesting a review and variance of the Decision. The review application was filed pursuant to Section 10 of the Alberta Utilities Commission Act and sections 3, 4 and 6 of Rule 016: Review of Commission Decisions. The Commission designated the review application as Proceeding 22157. 4. As previously noted, the Decision awarded costs related to the participation of AML and the CCA in Proceeding 3585. 2 The CCA s application concerned certain findings of the Commission in the Decision with respect to the disallowance of a portion of the costs claimed for the services provided by FTI and Grid Power. Specifically, the Commission, after adjusting FTI s fees to bring them into conformity with the Scale of Costs under Rule 022: Rules on Costs in Utility Rate Proceedings, awarded costs which included a reduction of 40 per cent of the adjusted FTI fees claimed. A further adjustment to FTI s disbursements to bring these within the Scale of Costs was also made along with a deduction for the disbursements claimed for one of 1 2 Decision 21498-D01-2016: AltaLink Management Ltd., 2012-2013 Deferral Account Reconciliation, Costs Award, Proceeding 21498, September 7, 2016. In Proceeding 3585, the Alberta Direct Connect Consumers Association (ADC), Industrial Power Consumers Association of Alberta (IPCAA) and the CCA presented evidence or testimony on their own behalf and jointly as members of the Ratepayer Group (RPG). The CCA is the only entity that is eligible to recover costs under Rule 016. FTI and Grid Power, though retained by the CCA, presented evidence on behalf of the RPG in Proceeding.3585. Decision 22157-D01-2017 (February 15, 2017) 1

the consultants, Mr. Mohr s, attendance at the oral hearing. 3 With regard to Grid Power s fees, the costs awarded reflected a 50 per cent reduction. 5. In its review application, the CCA submitted that the Commission made errors of fact, law or jurisdiction in the Decision, raising a substantial doubt as to the correctness of the Decision, pursuant to Section 4(d)(i) of Rule 016; and further, argued that pursuant to Section 4(d)(ii) of Rule 016, previously unavailable facts material to the Decision, which existed prior to the issuance of the Decision but which were not previously placed in evidence, raised a substantial doubt as to the correctness of the Decision. 4 6. On November 7, 2016, the Commission issued a filing announcement of the review application and, by letter dated December 5, 2016, the Commission advised parties that pursuant to Rule 016, consideration of the review application would follow a two-step process: first, the Commission would determine whether the decision in question should be reviewed; and second, if the Commission granted an application for review, a hearing or other proceeding on the merits would be ordered to decide whether to confirm, rescind or vary the decision. 7. In the same letter, the Commission invited parties in Proceeding 21498, the costs proceeding, to register on or before December 23, 2016, to participate in Proceeding 22157, and established a process to file submissions and reply submissions. AML registered to participate in the proceeding, but indicated that it did not anticipate being actively involved. 8. The CCA filed a letter on January 13, 2017, advising that, as no parties had filed any further submissions, it would not be filing a reply submission. The Commission considers that the record for this proceeding closed on January 13, 2017, the date on which reply submissions were due. 9. In this decision, the members of the Commission panel who authored the Decision will be referred to as the hearing panel and the members of the Commission panel presently considering the review application will be referred to as the review panel. The members of the Commission panel who authored Decision 3585-D03-2016 5 are similarly referred to as the hearing panel as the composition of the panel for both the DACDA proceeding and the cost proceeding was the same. 10. In reaching its determinations, the review panel has reviewed the pertinent portions of the Decision and relevant materials comprising the record of this proceeding and of proceedings 3585 and 21498. Accordingly, references in this decision to specific parts of the record are intended to assist the reader in understanding the Commission s reasoning relating to a particular matter and should not be taken as an indication that the Commission did not consider all relevant portions of the several records with respect to the matter. 3 4 5 The reduction to FTI included reductions to the fees to bring them in line with the Scale of Costs and in Canadian currency. That adjustment decreased the original fees by $197,985.38. The adjusted fees were then reduced by 40 per cent. Exhibit 22157-X0001, CCA application at paragraph 8. Decision 3585-D03-2016: AltaLink Management Ltd., 2012 and 2013 Deferral Accounts Reconciliation Application, Proceeding 3585, Application 1611090-1, June 6, 2016. 2 Decision 22157-D01-2017 (February 15, 2017)

3 Background 11. On June 6, 2016, the Commission issued Decision 3585-D03-2016. The CCA submitted its costs claim application for approval and payment of its costs of participation in Proceeding 3585 on June 6, 2016 and the Commission assigned Proceeding 21498 to the cost proceeding. 12. The hearing panel issued the Decision on September 7, 2016. In the Decision, the hearing panel held that a reduction in the costs claimed by the CCA for the consulting fees of FTI and Grid Power was warranted. 13. As noted above, the hearing panel made two adjustments to FTI s costs claim. First, it denied the CCA s request to award costs to FTI s consultants above the Scale of Costs on the basis that the issues addressed in Proceeding 3585 were not of such a complex nature as to warrant costs for FTI s consultants above the Scale of Costs. The hearing panel s findings are at paragraph 55 of the Decision: 55. The Commission finds that while the volume of information in this application was substantial, the issues in the original proceeding that were pursued by FTI were not of such a complex nature that awarding costs above the Scale of Costs is warranted. The Commission also notes that FTI has provided evidence on many of these issues before the Commission in past proceedings and, as such, is familiar with these issues. [footnotes omitted] 14. Second, the hearing panel then reduced the adjusted-to-scale fees claimed for FTI on a global basis by 40 per cent. The hearing panel principally reduced the costs claimed because the CCA failed to contribute to a better understanding of the issues that FTI examined. Examples cited in the Decision included FTI s narrow examination of the two projects it reviewed. With respect to the first project, FTI limited its review to change notices without further examining other project documentation and, in the case of the second project, FTI undertook its analysis of potential legal remedies against SNC-Lavalin ATP Inc. (SNC-ATP) without the requisite qualifications or background expected of an expert. 6 15. Additionally, the hearing panel found that the description of the work performed by each of the seven FTI consultants was similar and that the submitted invoices did not offer any detailed explanation for this apparent duplication of tasks: 60. Additionally, with regard to the tasks performed by the various consultants from FTI, the Commission has reviewed both the invoices and the CCA s outline of the background qualifications of these individuals and the areas of work each performed. The Commission finds that the need for the services of all the consultants has not been sufficiently justified in the costs claim application. For example, Mr. Tusa and Mr. Mohr each spent over 350 hours in preparation. Mr. Gray and Mr. Hoey each spent an additional 208.9 and 218 hours in preparation, respectively. Mr. Gray, located in Calgary, is a director with FTI s Forensic and Litigation Consulting practice with 20 years of experience. The time spent by Mr. Gray was to assist with the review and assessment of AML s responses to [information requests (IRs)], identifying deficiencies or incomplete responses in [IRs], preparation of 3rd round of [IRs], providing assistance with unwarranted project changes authorized by AML and assistance with preparation of cross 6 Decision 21498-D01-2016 at paragraphs 58-59. Decision 22157-D01-2017 (February 15, 2017) 3

examination of AML s witness panels. Descriptions regarding the work performed by Mr. Mohr, Mr. Tusa and Mr. Hoey are similar. The submitted invoices do not offer a sufficient explanation for this apparent duplication of tasks. Further, although, the CCA has argued that Mr. Mohr s supportive role included ensuring continuity among the original proceeding and past similar AltaLink proceedings, the Commission notes that Mr. Tusa had been actively involved in these past proceedings. For instance, Mr. Tusa provided services in AltaLink s 2013-2014 GTA [general tariff application] proceeding, Proceeding 2044, in which the Commission also considered AltaLink s 2010-2011 DACDA costs. The cost claim for FTI s participation in Proceeding 2044 reveals that Mr. Tusa claimed costs reflecting 489.00 hours of work. As such, the Commission is not persuaded that continuity is a sufficient explanation for requiring all of the services of Mr. Mohr. Last, one of the justifications brought forward by the CCA in support of its request for costs above scale was the tools available through FTI to sift through massive amounts of data. However, there does not appear to be any evidence of any cost savings resulting from the use of these tools, or the use of multiple experts with like experience. [footnotes omitted] 16. The hearing panel also adjusted the disbursements claimed by FTI. The hearing panel was not convinced of the need to have both Mr. Tusa and Mr. Mohr in attendance at the hearing. In support of its findings, the hearing panel stated: 63. The CCA claimed disbursements for attendance at the hearing by both Mr. Tusa and Mr. Mohr while only Mr. Tusa appeared as a witness. In the circumstances, the Commission has not been convinced of the need to have both Mr. Tusa and Mr. Mohr personally in attendance at the hearing. A review of the invoices reveals that Mr. Tusa participated in cross-examination, while Mr. Mohr assisted the CCA counsel with preparation for cross examination and assessed the CCA s cross-examination of AltaLink s witness panel. The Commission finds that Mr. Mohr did not need to be in attendance at the hearing to accomplish these tasks. The Commission disallows all disbursements claimed for Mr. Mohr s attendance at the hearing. The disbursements claimed for Mr. Mohr relate to costs for airfare, accommodation, meals, mileage, taxi and parking, in the total amount of $4,242.92. [footnotes omitted] 17. In addition, the hearing panel adjusted the remaining FTI disbursements to ensure that they were either within the Scale of Costs or permitted for recovery under Appendix A of Rule 022. 7 18. Grid Power claimed fees for 550.4 hours of work, and with the exception of 24.80 hours claimed for administrative services provided by Liam Cline, this work was performed by Mr. Trevor Cline. His evidence included preparing an expert report (the Grid Power report) on line optimization, tower selection and tower utilization and testifying in the oral hearing. Mr. Cline also assisted the RPG s submissions on the issue of pipeline mitigation costs for the Cassils to Bowmanton (CB) and Heartland projects. The hearing panel directed a 50 per cent reduction in fees on the basis that Grid Power s evidence did not contribute to a better understanding of the issues because it failed to address the Commission s previous findings in Decision 2014-283 8 in virtually similar circumstances, 9 the hours were not justified 10 and 7 8 Decision 21498-D01-2016 at paragraphs 64-66. Decision 2014-283: ATCO Electric Ltd.,2012 Transmission Deferral Account and Annual Filing for Adjustment Balances, Proceeding 2683, Application 1609720-1, October 2, 2014. 4 Decision 22157-D01-2017 (February 15, 2017)

Mr. Cline s testimony on pipeline mitigation costs failed to take into account previous Commission panel findings on the same issue. 11 19. The costs claimed and the costs ultimately awarded to FTI and Grid Power are provided in the table below: Table 1. FTI and Grid Power costs Claimant Total fees claimed Total disbursements claimed Total GST claimed Total amount claimed Total fees awarded Total disbursements awarded Total GST awarded Total amount awarded FTI Consulting $617,261.00 $12,166.83 $0.00 $629,427.83 $251,565.00 $6,871.43 $0.00 $258,436.43 Grid Power Development and Design $132,516.0 $508.80 $6,634.27 $139,659.07 $66,816.00 $508.80 $3,349.27 $70,674.07 4 The Commission s review process 20. The Commission s authority to review its own decisions is discretionary and is found in Section 10 of the Alberta Utilities Commission Act. That act authorizes the Commission to make rules governing its review process and the Commission established Rule 016 under that authority. 21. The review process has two stages. In the first stage, a review panel must decide whether there are grounds to review the original decision. This is sometimes referred to as the preliminary question. If the review panel decides that there are grounds to review the decision, it moves to the second stage of the review process where the Commission holds a hearing or other proceeding to decide whether to confirm, vary, or rescind the original decision. In this decision, the Commission has decided the preliminary question. 22. Section 6(3) describes the circumstances in which the Commission may grant a review as follows: (3) The Commission may grant an application for review of a decision, in whole or in part, where it determines, for an application for review pursuant to subsections 4(d)(i), (ii) or (iii), that the review applicant has demonstrated: (a) (b) In the case of an application under subsection 4(d)(i), the existence of an error of fact, law or jurisdiction is either apparent on the face of the decision or otherwise exists on a balance of probabilities that could lead the Commission to materially vary or rescind the decision. In the case of an application under subsections 4(d)(ii) or 4(d)(iii), respectively, the existence of: 9 10 11 Decision 21498-D01-2016 at paragraphs 71-72. Decision 21498-D01-2016 at paragraph 74. Decision 21498-D01-2016 at paragraph 76. Decision 22157-D01-2017 (February 15, 2017) 5

(i) (ii) Previously unavailable facts material to the decision, which existed prior to the issuance of the decision in the original proceeding but were not previously placed in evidence or identified in the proceeding and could not have been discovered at the time by the review applicant by exercising reasonable diligence; or Changed circumstances material to the decision, which occurred since its issuance. that could lead the Commission to materially vary or rescind the decision, ( ) 23. Section 4(d) provides that an application for review must set out the grounds for the application, which grounds may include, under Section 4(d)(i), that the Commission made an error of fact, law or jurisdiction. Section 4(d)(ii) includes the grounds related to previously unavailable facts material to the decision, which existed prior to the issuance of the decision in the original proceeding but were not previously placed in evidence or identified in the proceeding and could not have been discovered at the time by the review applicant by exercising reasonable diligence. Section 4(d)(iii) includes the grounds related to changed circumstances material to the decision, which occurred since its issuance. The CCA has not raised this latter ground in its review application. 24. In Decision 2012-124, 12 the Commission addressed the role of a review panel and concluded that it should apply the following principles to its consideration of the review applications before it: First, decisions of the Commission are intended to be final; the Commission s rules recognize that a review should only be granted in those limited circumstances described in Rule 016. Second, the review process is not intended to provide a second opportunity for parties with notice of the application to express concerns about the application that they chose not to raise in the original proceeding. Third, the review panel s task is not to retry the application based upon its own interpretation of the evidence nor is it to second guess the weight assigned by the hearing panel to various pieces of evidence. Findings of fact and inferences of fact made by the hearing panel are entitled to considerable deference, absent an obvious or palpable error. 13 25. The review panel finds that these principles apply equally to its consideration of the review application filed in this proceeding. 12 13 Decision 2012-124: AltaLink Management Ltd. and EPCOR Distribution & Transmission Inc., Decision on Request for Review and Variance of Decision 2011-436 Heartland Transmission Project, Proceeding 1592, Applications 1607924-1, 1607942-1, 1607994-1, 1608030-1, 1608033-1, May 10, 2012. Decision 2012-124, at paragraph 31. 6 Decision 22157-D01-2017 (February 15, 2017)

5 Grounds for review and hearing panel findings 26. In its application, the CCA claimed that the primary reasons or concerns of the Commission in directing that 59% 14 of the CCA consulting costs for FTI be disallowed are: 15 a. Amounts associated with FTI s fees were above the Scale of Costs. b. The AUC found that FTI devoted a considerable amount of time and resources to matters that the Commission ultimately determined did not represent a significant concern, referring to the instance of FTI s review of change notices on the Cassils to Bowmanton and Heartland projects. c. The AUC expressed concern about the qualifications of various consultants finding that work they performed may have been outside their qualifications and background; d. The AUC found the need for services of all the consultants had not been sufficiently justified in the cost claim application, and e. The AUC expressed concern that attendance of both Mr. Tusa and Mr. Mohr was not necessary because Mr. Mohr did not need to be present to assist counsel directly. 27. The CCA submitted that each of these findings represented an error of fact, law or jurisdiction and the arguments presented in the CCA review application with respect to each of these alleged errors have been summarized as follows: a. Amounts above the Scale of Costs The CCA claimed that the hearing panel erred in finding that the issues were not sufficiently complex. It argued that there is no definition regarding what is complex in Rule 022 and that the complexity of issues in Proceeding 3585 continued to evolve and expand. It pointed to the multiple revisions to the proceeding schedule, the extension of the oral hearing into two sessions and its resulting impact on exchange rates, all of which it stated supported a claim for costs in excess of scale. In addition, the CCA argued that AltaLink had retained Power Advocate, another consultant who charged AltaLink costs in excess of the scale. While the CCA acknowledged that AltaLink did not request costs in excess of scale, it argued that AltaLink would have paid these higher costs and, as a result, not awarding costs above scale for intervener consultants puts the CCA at a disadvantage. b. Devoted a considerable amount of time and resources to matters that the Commission ultimately determined did not represent a significant concern The CCA claimed that the hearing panel erred because the finding suggests the ratepayers should not test aspects of the record unless it knows in advance the Commission will agree its contribution will provide assistance to the Commission. The CCA submits that determining FTI should not be awarded their full cost claim simply because the Commission disagreed with them is 14 15 In the CCA application, it explained that the 59 per cent represents the Scale of Cost rate reductions, other cost reductions and the 40 per cent fee reduction. Exhibit 2196-X0001, page 4, paragraph 1. Decision 22157-D01-2017 (February 15, 2017) 7

insufficient reasoning to disallow these costs. To the extent the Commission s position remains, the maximum hours of disallowance should be limited to 191.8 hours. 16 c. Qualifications of various consultants The CCA argued that the hearing panel made an error of fact in finding that FTI, in its evidence, was conducting a legal interpretation in lieu of a contract compliance interpretation 17 of the relationship between AltaLink and its service provider, SNC-ATP. The CCA argued that there was never any intention on its part to address anything more in its evidence than contract compliance and that Mr. Tusa and FTI were qualified to provide that assessment. d. The functions of FTI consultants overlapped The CCA submitted that FTI consultants offered unique and valued perspectives on the testing of the record. It further argued that the AUC did not correlate its decision on the disallowance of fees and disbursements reconciling specific issues raised with the dates and individual time charges submitted by the CCA s consultants. 18 The CCA then provided examples in its review application to illustrate that no overlap had occurred. 19 e. Attendance of both Mr. Tusa and Mr. Mohr was not necessary The CCA submitted that there was no basis in evidence to support the finding that Mr. Mohr s attendance was not required by counsel to the CCA, especially in light of the scheduling challenges and limited timeframe to review undertakings and that had the CCA been aware this was a problem it would have demonstrated this. 20 28. In its application, the CCA claimed that the Commission erred in directing a reduction of Grid Power s costs on the basis that it incorrectly found: a. That the Ratepayer Group and Mr. Cline s report maintained that AltaLink was not required to comply with the new ISO [Independent System Operator] Rule 502.2. 21 b. That Mr. Cline s report failed to address Decision 2014-283 regarding a utility s decision to design and build a project in compliance with ISO Rule 502.2. 22 c. That Mr. Cline failed to take into account the Commission s prior findings when providing evidence on pipeline mitigation. 23 d. That Mr. Cline failed to justify the hours spent preparing his evidence. 16 17 18 19 20 21 22 23 Exhibit 22157-X0001 at page 7, paragraph 9. In the CCA review application, the CCA advised that 191.8 hours reflects the time spent by FTI consultants reviewing the change notices on the CB and Heartland projects. Exhibit 22157-X0001 at page 7, paragraph 10. Exhibit 22157-X0001 at page 5, paragraph 4. Exhibit 22157-X0001, pages 7-8. Exhibit 22157-X0001at page 9, paragraph 17. Exhibit 22157-X0001 at page 11, paragraph 25. Exhibit 22157-X0001 at page 12, paragraph 27. Exhibit 22157-X0001 at page 13, paragraph 30. 8 Decision 22157-D01-2017 (February 15, 2017)

29. The arguments presented in the CCA review application with regard to each of these alleged errors are summarized as follows: Table 2. a. Compliance with the new ISO Rule 502.2: The CCA argued that there is no reference in Grid Power s report, IRs or RPG argument of such a position. It argued that the reference to the requirement to design the transmission towers was limited to the background section of Mr. Cline s report, in which he quoted the ISO s functional specifications. b. Failed to address the Commission s findings in Decision 2014-283: The CCA argued that the Grid Power report fully addressed this decision by performing an analysis assuming that ISO Rule 502.2 had been implemented and that this was done on the basis of accepting the Commission s findings in Decision 2014-283 which stated that it was reasonable for the utility to have applied the requirements of ISO Rule 502.2 but that the Commission expects the TFOs to demonstrate that their tower selection is the most cost effective to meet the design requirements. 24 c. Failed to take into account the Commission s prior findings when providing evidence on pipeline mitigation: The CCA argued that Mr. Cline reviewed the record of Proceeding 457 in depth in order to verify that AltaLink had failed to provide any estimate for the increase in pipeline mitigation costs which would result from the route adjustment made. Moreover, the CCA added that 24 of the 36 hours spent on this issue was time spent responding to IR requests of the Commission and an undertaking and that it would be unreasonable to take exception to and refuse cost recovery for consulting hours expended at the request of the Commission itself. 25 d. Failed to justify the hours spent preparing his evidence: The CCA argued that Mr. Cline assisted in reviewing the entire application and that only a limited portion of his time was spent on preparing his report. It then presented in tabular form a breakdown of his time spent on activities (in actual and percentage terms) based on hours logged against areas of interest. The table is reproduced below: Grid Power activity Mr. Cline Total of all activities 525 All 237 45% Conductor Selection 12 2% Heartland Pipeline Mitigation 31 6% Tower Capacity Utilization 131 25% Foundations 38 7% Tower Optimization 76 15% 30. The review panel will consider in the sections below the grounds raised by the CCA for FTI s costs award summarized in paragraph 27 above. Consideration of the alleged errors of fact or law related to Grid Power s costs award, identified at paragraph 29 above, will follow. The review panel will then address the CCA s grounds for the review application pursuant to 24 25 Exhibit 22157-X0001 at page 12, paragraph 28. Exhibit 22157-X0001 at page 14, paragraph 31. Decision 22157-D01-2017 (February 15, 2017) 9

Section 4(d)(ii) of Rule 016, and the CCA s additional submissions in support of its review application. 6 Review panel findings 6.1 FTI costs award 6.1.1 Amounts above the Scale of Costs 31. The complexity of the issues in Proceeding 3585 was considered by the hearing panel at paragraphs 54 and 55 of the Decision, where the hearing panel stated: 54. The Commission may award costs in excess of the Scale of Costs if the costs claimant can advance persuasive argument that the scale is inadequate given the complexity of the case. In this costs application, the request for costs in excess of the scale was made on the basis of the expertise that FTI brought to this proceeding, the tools available through FTI to sift through massive amounts of data, the fact that FTI s hourly rates have not increased over the past 7 years, the fact that the scale of rates charged by FTI in this proceeding is already 35 per cent to 40 per cent less than the standard rates FTI typically charges, and the impact of the decline in the Canadian dollar as compared to the United States dollar. (footnotes omitted) 55. The Commission finds that while the volume of information in this application was substantial, the issues in the original proceeding that were pursued by FTI were not of such a complex nature that awarding costs above the Scale of Costs is warranted. The Commission also notes that FTI has provided evidence on many of these issues before the Commission in past proceedings and, as such, is familiar with these issues. 32. The principal argument of the CCA to support its claim that the hearing was, in fact, complex, is based on the time it took to process Proceeding 3585. However, the length of time to process an application does not, in and of itself, make it more complex. In the Decision, the hearing panel acknowledged the volume of materials that had to be reviewed but nonetheless determined that the issues were not unfamiliar to FTI and did not meet the necessary threshold of complexity to justify an award above the Scale of Costs. The CCA did not dispute the hearing panel s finding that the issues were familiar to FTI or that FTI had provided evidence on many of these issues in past proceedings. 33. Proceeding 3585 concerned the approval of 103 capital transmission projects. 26 Those numbers contributed to the volume of material that had to be reviewed. The hearing panel in Proceeding 3585 also acknowledged that the timing of this application, which was filed 28 days after AltaLink filed its 2015-2016 GTA, added to the difficulty in processing this application. However, the review panel does not find any indication in Decision 3585-D03-2016 that the issues which arose in the proceeding leading to that decision were any more complex than past DACDAs. Further, the review panel notes from its review of Decision 3585-D03-2016 that FTI confined its examination to a review of only two of the 103 projects being considered, CB and Heartland, and limited its examination to only certain documents relating to those projects. 27 26 27 Decision 3585-D03-2016 at paragraph 2. Decision 21498-D01-2016 at paragraph 58. 10 Decision 22157-D01-2017 (February 15, 2017)

34. The CCA also referenced the costs awarded to PowerAdvocate in support of its claim that the case was complex, pointing to the fact that AltaLink would have paid PowerAdvocate higher than scale costs which put the CCA at an unfair advantage. The review panel does not find this argument to be persuasive. With regard to the unfair advantage asserted, and as recognized by the CCA, AltaLink shareholders would have to cover the cost variance between what PowerAdvocate charged AltaLink and what was recovered from ratepayers. Similarly, the CCA would have to cover the difference between what it was charged and what it recovered. No party is entitled, by way of right, to 100 per cent cost recovery. The review panel finds that the decision of the hearing panel to not award costs in excess of the Scale of Costs is a determination that is entitled to considerable deference. The review panel, moreover, is not persuaded by the CCA s suggestion that its participation in regulatory proceedings is unfairly disadvantaged relative to deeper-pocketed regulated entities if the Commission does not allow it full recovery of all costs claimed, including costs above scale. This is because an intervener, unlike an applicant, has a choice whether to participate in a proceeding and, if so, to what extent. For example, AltaLink engaged PowerAdvocate to provide expert analysis of market competitive rates for EPC services in Alberta but this was not a matter that FTI addressed in the DACDA proceeding. Also, the CCA fails to mention that the hearing panel directed a 20 per cent reduction in fees (at the scale) claimed by PowerAdvocate on the basis that the need for all of the costs claimed had not been demonstrated or sufficiently justified. 35. It is clear that the hearing panel considered the complexity of the issues in Proceeding 3585 in the specific context of the CCA s request that FTI s fees be awarded in excess of the Scale of Costs. The review panel considers that the hearing panel s assessment of the complexity of the issues in Proceeding 3585 was a discretionary determination that, on its face or on a balance of probabilities, was not unreasonable. The CCA has not shown, either on a balance of probabilities or apparent on the face of the Decision, that an error in fact, law or jurisdiction exists on this ground that could lead the Commission to materially vary or rescind the Decision. 6.1.2 Devoted a considerable amount of time and resources to matters that the Commission ultimately determined did not represent a significant concern. 36. The hearing panel stated in paragraph 58 of the Decision that when exercising its discretion to award costs, the Commission would consider whether the eligible participant contributed to a better understanding of the issues before the Commission. This requirement is set out in Section 11.1(b) of Rule 022. The hearing panel then presented examples from Decision 3585-D03-2016 regarding the CB and Heartland projects that FTI examined which were illustrative of how the participant did not meet this requirement. The hearing panel quoted extensively from the Commission s findings in Decision 3585-D03-2016 to support its determination that FTI s contribution was lacking. It is apparent from a review of paragraph 58 that the hearing panel reached its conclusion based on findings of fact made by the hearing panel in Decision 3585-D03-20106 and, specifically, that FTI s limited review of the record for the two projects on which it provided submissions resulted in incomplete or misleading evidence. For example, paragraphs 434 and 436 of the DACDA decision, reproduced in the Decision, stated, in part: 434. With regard to the assertion made [by FTI] that AltaLink has not provided evidence to justify the change notices that it approved, the Commission does not agree. The evidence in question runs into the thousands of pages and the Commission has reviewed Decision 22157-D01-2017 (February 15, 2017) 11

all of it. In its review, the Commission came across numerous cases where the change was supported by extra work requests, labour, equipment and material, time sheets, correspondence from subcontractors, emails or other items detailing the need for the change. 436. The Commission has also identified certain flaws arising from Mr. Tusa s analysis and exclusive reliance on change notices. In addition, Mr. Tusa s focus on change notices did not capture other changes in costs identified on subcontract amendments when these changes were not processed through a change notice. 37. The hearing panel also referenced paragraph 683 from Decision 3585-D03-2016 in which the Commission found that The prudence of a particular expense cannot be determined based on the examination of change notices alone. The Commission, in addition to its review of the change notices, also examined all the subcontract amendments with respect to the CB project. Further, the review panel notes from Decision 3585-D03-2016 that the list of change notices recommended for disallowance in FTI s evidence totalled $56.6 million. 28 Although the record was extensive, FTI chose to limit its review to only part of the record for the projects and then filed its evidence for consideration by the hearing panel on only the partial record. 38. The findings of fact made by the hearing panel regarding the consequences of the limited review provided by FTI in its evidence in Proceeding 3585 were not challenged and the review panel finds that the hearing panel s assessment of the extent to which FTI contributed to a better understanding of the issues before the Commission in Proceeding 3585, supported by these facts, was a determination that, on its face or on a balance of probabilities, was not unreasonable. The CCA has not shown, either on a balance of probabilities or apparent on the face of the Decision, that an error in fact, law or jurisdiction exists on this ground that could lead the Commission to materially vary or rescind the Decision. 6.1.3 Qualifications of various consultants 39. Paragraph 59 of the Decision directly refers to Mr. Tusa s qualifications to analyze potential remedies available to AltaLink against SNC-ATP and between SNC-ATP and its subcontractors. The hearing panel stated: 59. Another example relates to the considerable amount of time and resources FTI spent analysing legal remedies available to AltaLink against SNC-ATP, and legal remedies available to SNC-ATP against subcontractors, as well as the time spent interpreting the legal operation of contractual relationships. The Commission found in the decision that Mr. Tusa did not have the relevant qualifications and background to provide this type of analysis and legal interpretation. [footnotes omitted] 40. In its review application, the CCA asserts that if the intent was to provide anything more than contract compliance, which Mr. Tusa and other FTI staff are qualified to conduct, then CCA s counsel would have added the additional layer of legal oversight to the investigation. 29 41. The CCA s argument on this ground is not supportable. A review of the Decision reveals that the hearing panel s finding constituted a further example of FTI not contributing to a better 28 29 Decision 3585-D03-2016 at paragraph 680. Exhibit 22157-X0001 at page 7, paragraph 10. 12 Decision 22157-D01-2017 (February 15, 2017)

understanding of the issues because Mr. Tusa was found to be unqualified to provide the evidence the CCA submitted on this particular issue. Paragraph 59 of the Decision references paragraph 440 from Decision 3585-D03-2016, which stated: To the extent that FTI s evidence on these matters relies on Mr. Tusa s understanding of the legal operation of the contractual relationship, the hearing panel finds that Mr. Tusa did not have the relevant qualifications and background to provide this type of interpretation. In the review application, the CCA has argued that this finding was an error of fact. However, the CCA did not request a review of that finding in the DACDA decision and cannot do so now indirectly through a review request of the Decision. 42. With regard to the hearing panel s reliance on this finding of fact in further support of its determination regarding the extent to which FTI contributed to a better understanding of the issues before the Commission, the review panel does not consider this determination, on its face or on a balance of probabilities, to be unreasonable. The CCA has not shown, either on a balance of probabilities or apparent on the face of the Decision, that an error in fact, law or jurisdiction exists on this ground that could lead the Commission to materially vary or rescind the Decision. 6.1.4 Unsupported overlap in functions 43. In paragraph 60 of the Decision, the hearing panel determined that FTI had failed to sufficiently justify in the costs claim application the need for the services of all seven FTI consultants who worked on the proceeding. This insufficient justification was an additional reason to reduce the fees by 40 per cent and was not specific to any one consultant s time or performance. Duplication is well known and understood to be a reason to reduce fees. In its review application, the CCA submitted that the Decision: omits a full appreciation for the different, unique, and individual roles played by each of the experts and consultants of FTI, a distinction that we appreciate could have been more appropriately addressed within the context of the cost proceeding. A more detailed description of the manner in which FTI assisted the CCA in regulatory analysis and research would better illustrate how the activities of FTI s professionals were required by the CCA, given the context of AML s 2012-13 Deferral Account Application. 30 44. The review panel does not agree with the CCA that there is a reviewable error in fact, law or jurisdiction for a failure of the hearing panel to fully appreciate the unique and individual roles played by each of the experts and consultants of FTI. As set out in paragraph 60 of the Decision, the hearing panel clearly considered the record before it which included the invoices and the CCA s outline of the background qualifications of these individuals and the areas of work each performed. In addition, at paragraph 60 of the Decision, the hearing panel provided specific examples of the apparent duplication in question, an indication that it carefully considered the documentation filed by the CCA in support of its costs claim. At paragraph 60, the hearing panel stated: 60. Additionally, with regard to the tasks performed by the various consultants from FTI, the Commission has reviewed both the invoices and the CCA s outline of the background qualifications of these individuals and the areas of work each performed. The Commission finds that the need for the services of all the consultants has not been 30 Exhibit 22157-X0001 at page 6, paragraph 2. Decision 22157-D01-2017 (February 15, 2017) 13

sufficiently justified in the costs claim application. For example, Mr. Tusa and Mr. Mohr each spent over 350 hours in preparation. Mr. Gray and Mr. Hoey each spent an additional 208.9 and 218 hours in preparation, respectively. Mr. Gray, located in Calgary, is a director with FTI s Forensic and Litigation Consulting practice with 20 years of experience. The time spent by Mr. Gray was to assist with the review and assessment of AML s responses to [IRs], identifying deficiencies or incomplete responses in [IRs], preparation of 3rd round of [IRs], providing assistance with unwarranted project changes authorized by AML and assistance with preparation of cross examination of AML s witness panels. Descriptions regarding the work performed by Mr. Mohr, Mr. Tusa and Mr. Hoey are similar. The submitted invoices do not offer a sufficient explanation for this apparent duplication of tasks. Further, although, the CCA has argued that Mr. Mohr s supportive role included ensuring continuity among the original proceeding and past similar AltaLink proceedings, the Commission notes that Mr. Tusa had been actively involved in these past proceedings. For instance, Mr. Tusa provided services in AltaLink s 2013-2014 GTA proceeding, Proceeding 2044, in which the Commission also considered AltaLink s 2010-2011 DACDA costs. The cost claim for FTI s participation in Proceeding 2044 reveals that Mr. Tusa claimed costs reflecting 489.00 hours of work. As such, the Commission is not persuaded that continuity is a sufficient explanation for requiring all of the services of Mr. Mohr. Last, one of the justifications brought forward by the CCA in support of its request for costs above scale was the tools available through FTI to sift through massive amounts of data. However, there does not appear to be any evidence of any cost savings resulting from the use of these tools, or the use of multiple experts with like experience. [footnotes omitted] 45. Further, the review panel does not consider that the hearing panel erred in not setting out further process steps requesting the CCA to provide additional information and clarification on the roles and tasks performed by each of the FTI consultants in Proceeding 3585. As outlined in Section 4, Appendix C, of Rule 022, The onus is on the eligible claimant to provide sufficient information for the Commission to effectively assess its claim and must address the specifics of the proceeding. At its discretion, the Commission may issue further process steps, including IRs, in particular circumstances, including where comments are received on the costs claim application or where the costs claim application contains ambiguous or unclear information that requires further clarification. The costs claim applicant, however, cannot rely on such further process steps to meet its onus to support the reasonableness of its cost claim. 46. Accordingly, the review panel finds that the CCA has not shown, either on a balance of probabilities or apparent on the face of the Decision, that an error in fact, law or jurisdiction exists on this ground that could lead the Commission to materially vary or rescind the Decision. 14 Decision 22157-D01-2017 (February 15, 2017)

6.1.5 Requirement of Mr. Mohr and Mr. Tusa to both attend the oral hearing 47. The CCA asserted in its review application that: there is no basis in evidence that the participation and attendance of Mr. Mohr and Mr. Tusa was not required by counsel to the CCA, especially in light of the scheduling challenges and limited timeframe to review undertakings. Had the CCA been aware this issue was of heightened concern, further explanation could have been offered to demonstrate on the record of this cost proceeding that FTI consultants were necessary in both research preparations and in ongoing support within the oral hearing. 31 48. The review panel has already provided its findings in paragraph 45 above regarding the CCA s claim that the hearing panel erred in not setting out further process steps. 49. In the Decision, the hearing panel determined that it was not necessary for both Mr. Tusa and Mr. Mohr to be present in Calgary and, accordingly, disallowed the disbursements related to Mr. Mohr s attendance in Calgary. The hearing panel stated at paragraph 63 of the Decision: 63. The CCA claimed disbursements for attendance at the hearing by both Mr. Tusa and Mr. Mohr while only Mr. Tusa appeared as a witness. In the circumstances, the Commission has not been convinced of the need to have both Mr. Tusa and Mr. Mohr personally in attendance at the hearing. A review of the invoices reveals that Mr. Tusa participated in cross-examination, while Mr. Mohr assisted the CCA counsel with preparation for cross examination and assessed the CCA s cross-examination of AltaLink s witness panel. The Commission finds that Mr. Mohr did not need to be in attendance at the hearing to accomplish these tasks. The Commission disallows all disbursements claimed for Mr. Mohr s attendance at the hearing. The disbursements claimed for Mr. Mohr relate to costs for airfare, accommodation, meals, mileage, taxi and parking, in the total amount of $4,242.92 50. The hearing panel did not determine that Mr. Mohr did not need to participate, only that he did not need to be in attendance in Calgary to accomplish the tasks assigned to him. The CCA has not explained in its review application why scheduling challenges required Mr. Mohr to be in attendance. Based on the foregoing, the review panel finds that the CCA has not shown, either on a balance of probabilities or apparent on the face of the Decision, that an error in fact, law or jurisdiction exists on this ground that could lead the Commission to materially vary or rescind the Decision. 6.2 Grid Power costs award 6.2.1 Compliance with the new ISO Rule 502.2 and failure to address Commission finding s in Decision 2014-283 51. In the Decision, the hearing panel, in support of its decision to reduce Grid Power s costs, made specific references to both the content of and value it ascribed to the Grid Power report and Mr. Cline s oral testimony. It concluded that: Mr. Cline did not contribute to a better understanding of the issues before the Commission when he failed to address in the Grid Power report, the Commission s 31 Exhibit 22157-X0001 at page 9, paragraph 17. Decision 22157-D01-2017 (February 15, 2017) 15

findings in Decision 2014-283 regarding a utility s decision to design and build a project in compliance with ISO Rule 502.2 in advance of the rule coming into effect and regarding conductor options. 32 52. Further, as set out in paragraph 74 of the Decision, the hearing panel reviewed the Grid Power report and compared its contents with the report filed by Grid Power in Proceeding 2683. It did so as the CCA had asserted in its costs application that the costs for Mr. Cline s engineering analysis in the Grid Power report were minimized by utilizing, as much as possible, structural designs and modules developed for Proceeding 2683. 33 The hearing panel determined that the content of the Grid Power report in Proceeding 3585 was largely similar to the report [Mr. Cline] prepared in Proceeding 2683 and determined that [G]iven the similarity of the evidence, including the reports, the Commission was not persuaded by the explanation provided in the costs application that the total amount claimed in respect of the preparation of the Grid Power report was justified. 53. A review of the findings in Decision 3585-D03-2016, reveals that the hearing panel s determination of the contribution provided by Grid Power based on its evidence on tower design was influenced by the Commission s decision in Proceeding 2683 on the extent to which ISO Rule 502.2 could apply in advance of the rule coming into effect. This is apparent from a review of paragraph 70 from the Decision. 54. In Proceeding 3585, Grid Power submitted evidence suggesting that AltaLink could have selected a steel pole design and reduced its costs of towers and foundation by $101 million. 34 A review of Decision 3585-D03-2016, reveals that the Commission panel carefully considered the recommendations set out in the Grid Power report as they applied to ISO Rule 502.2 requirements. Throughout the report, Grid Power referenced the changes in requirements due to ISO Rule 502.2 and how those changes resulted in higher costs through AltaLink s decision to use the R-series towers. Also, in response to an IR, Mr. Cline stated that, in his opinion: to comply with ISO Rule 502.2, AML should have designed and constructed the lines to meet the functional specifications which were approved in 2010; as is stipulated in clause 2(3). The AML decision to design the lines on the basis of a draft version of the future design requirements of 502.2 was not mandatory but rather was a choice AML made. 35 55. At paragraph 528 of Decision 3585-D03-2016, the hearing panel found that The RPG maintained that AltaLink was not required to comply with the requirements of new ISO Rule 502.2 and that a more economical design of transmission tower families could have been selected during the detailed line design and at paragraph 530 determined that AltaLink s decision to apply Rule 502.2 requirements to the five 240-kV projects in advance of the rule coming into effect was also reasonable given its awareness of the new requirements through its involvement in the AESO s rule development process. Having made this determination, the hearing panel then determined whether the alternative towers proposed by the RPG could have satisfied the requirements of this rule. It is apparent from the analysis conducted by the hearing 32 33 34 35 Decision 21498-D01-2016 at paragraph 73. Decision 21498-D01-2016 at paragraph 74. Decision 21498-D01-2016 at paragraph 21. Exhibit 3585- X0696, CCA-AML-2015SEP24-012(d). 16 Decision 22157-D01-2017 (February 15, 2017)