2000 – 10423 101 St NW, Edmonton, AB T5H 0E8 Canada epcor.com December 21, 2017 VIA EMAIL & RESS Ms. Kirsten Walli, Board Secretary Board Secretary Ontario Energy Board P.O. Box 2319 2300 Yonge Street, 27th Floor Toronto, ON M4P 1E4 Dear Ms. Walli: Re: EB-2017-0373 and EB-2017-0374 Town of Collingwood and EPCOR Collingwood Distribution Corp. application under section 86 of the Ontario Energy Board Act, 1998 and application for other related relief I am legal counsel to EPCOR Utilities Inc. and its subsidiaries. Enclosed please find an application pursuant to section 86 of the Ontario Energy Board Act, 1998, filed on behalf of the applicants, the Town of Collingwood (the “Town”) and EPCOR Collingwood Distribution Corp. (“EPCOR”). This MAAD application contains two separate but related share acquisitions involving the sale of Collingwood PowerStream Utility Services Corp. (“CollusHoldco”), the holding company of Collus PowerStream Corp., the electricity distributor serving the Collingwood area. In the initial share transaction, the Town will acquire the remaining 50% interest in CollusHoldco from Alectra Utilities Corporation. Following the closing of this first transaction, the Town will be the sole shareholder of CollusHoldco. In the second transaction, EPCOR will acquire all of the issued and outstanding shares of CollusHoldco from the Town. The intent of the parties is that these share acquisition transactions will close on the same day subsequent to the receipt of the Board’s approvals for these transactions. The Applicants request that the Board proceed by way of a written hearing. Please do not hesitate to contact me by phone at (780) 412-3998 or by email at [email protected] should you have any questions. Sincerely, Britt Tan Legal Counsel EPCOR Utilities Inc. EB-2017-0373 EB-2017-0374 Page 1 ONTARIO ENERGY BOARD IN THE MATTER OF an application made by the Town of Collingwood for leave to purchase 50% of the issued and outstanding shares of Collingwood PowerStream Utility Services Corp. from Alectra Utilities Corporation, made pursuant to section 86(2)(b) of the Ontario Energy Board Act, 1998 (the “Phase 1 Acquisition”). IN THE MATTER OF an application made by EPCOR Collingwood Distribution Corp. for leave to purchase all of the issued and outstanding shares of Collingwood PowerStream Utility Services Corp. from the Town of Collingwood, made pursuant to section 86(2)(b) of the Ontario Energy Board Act, 1998 (the “Phase 2 Acquisition”). IN THE MATTER OF an application made by Collus PowerStream Corp., to be effective following the receipt of Phase 1 Acquisition approval from the Board, seeking to include a negative rate rider in the 2017 Board approved rate schedules of Collus PowerStream Corp. to give effect to a 1% reduction relative to 2017 base residential distribution rates (exclusive of rate riders), made pursuant to section 78 of the Ontario Energy Board Act, 1998. EB-2017-0373 EB-2017-0374 Page 2 Mapping of Application to filing requirements Filing Requirements Reference 2.1 The Index Index 2.2 The Application 2.2.1 Administrative Certification of the Evidence Schedule K Details of the authorized representative of the applicant/s, including the name, phone and fax numbers, and email and delivery addresses 8 Legal name of the other party or parties to the transaction, if not an applicant 1 8 Details of the authorized representative of the other party or parties to the transaction, including the name, phone and fax numbers, and email and delivery addresses 8 Brief description of the nature of the transaction for which approval of the OEB is sought by the applicant or applicants 2 - 4 2.2.2 Description of the Business of the Parties to the Transaction Describe the business of each of the parties to the proposed transaction, including each of their electricity sector affiliates engaged in, or providing goods or services to anyone 9.1 engaged in the generation, transmission, distribution or retailing of electricity Describe the geographic territory served by each of the parties to the proposed transaction, including each of their affiliates, if applicable, noting whether service area 9.2 boundaries are contiguous or if not the relative distance between service boundaries. Describe the customers, including the number of customers in each class, served by each 9.1 of the parties to the proposed transaction. 9.4 Describe the proposed geographic service area of each of the parties after completion of the proposed transaction. 9.3 2 9.1 Provide a corporate chart describing the relationship between each of the parties to the Schedule A proposed transaction and each of their respective affiliates. Schedule B Schedule L If the proposed transaction involves the consolidation of two or more distributors, please indicate the current net metering thresholds of the utilities involved in the proposed 9.5 transaction. 2.2.3 Description of the Proposed Transaction 2 Provide a detailed description of the proposed transaction. 3 4 EB-2017-0373 EB-2017-0374 Page 3 Filing Requirements Reference Provide a clear statement on the leave being sought by the applicant, referencing the 5 particular section or sections of the Ontario Energy Board Act, 1998. 6 Provide details of the consideration (e.g. cash, assets, shares) to be given and received by 2 each of the parties to the proposed transaction. 4 9.6 Provide all final legal documents to be used to implement the proposed transaction Schedule D Schedule E Provide a copy of appropriate resolutions by parties such as parent companies, municipal councils, or any other entities that are required to approve a proposed transaction Schedule I confirming that all these parties have approved the proposed transactions. 2.2.4 Impact of the Proposed Transaction Objective 1- Protect consumers with respect to prices and the adequacy reliability and quality of electricity service Indicate the impact the proposed transaction will have on consumers with respect to prices 10.1 and the adequacy, reliability and quality of electricity service. 10.2 Provide a year over year comparative cost structure analysis for the proposed transaction, comparing the costs of the utilities post transaction and in the absence of the transaction. 10.1 Provide a comparison of the OM&A cost per customer per year between the consolidating distributors. 10.1 Confirm whether the proposed transaction will cause a change of control of any of the transmission or distribution system assets, at any time, during or by the end of the 10.3 transaction. Describe how the distribution or transmission systems within the service areas will be operated. 10.3 Objective 2 - Promote economic efficiency and cost effectiveness and to facilitate the maintenance of a financially viable electricity industry Indicate the impact that the proposed transaction will have on economic efficiency and cost effectiveness (in the distribution or transmission of electricity); identifying the various aspect of utility operations where the applicant expects sustained operation efficiencies 11.1 (both quantitative and qualitative). Identify all incremental costs that the parties to the proposed transaction expect to incur which may include incremental transaction costs (e.g. legal, regulatory), incremental merged costs (e.g. employee severances), and incremental on-going costs (e g purchase 11.2 and maintenance of new IT systems). Explain how the consolidated entity intends to finance these costs. Provide a valuation of any assets or shares that will be transferred in the proposed transaction. Describe how this value was determined. 11.3 If the price paid as part of the proposed transaction is more than the book value of the assets of the selling utility, provide details as to why this price will not have an adverse 11.4 effect on the financial viability of the acquiring utility. EB-2017-0373 EB-2017-0374 Page 4 Filing Requirements Reference Provide details of the financing of the proposed transaction. 11.5 11.6 Provide financial statements (including balance sheet. income statement, and cash flow statement) of the parties to the proposed transaction for the past two most recent years. Schedule F Schedule G Provide pro forma financial statements for each of the parties (or if an amalgamation, the 11.7 consolidated entity) for the first full year following the completion of the proposed transaction. Schedule H 2.2.5 Rate considerations for consolidation applications Indicate a specific deferred rate rebasing period that has been chosen 12.1 For deferred rebasing periods greater than five years, confirm that the ESM will be as required by the 2015 Report and the Handbook N/A If the applicants proposed ESM a different from the ESM set out in the 2015 Report, the applicant must provide evidence to demonstrate the benefit to the customers of the N/A acquired distributor. 2.2.6 Other Related Matters Approval to continue with existing rate riders 13.3 Transfer of rate order and license N/A License amendment and cancellation N/A Approval to continue to track costs to the deferral and variance accounts currently approved by the OEB 13.2 Confirmation re no change in accounting standards for financial reporting following the closing of the proposed transaction 13.4 EB-2017-0373 EB-2017-0374 Page 5 APPLICATION 1. Introduction EPCOR Utilities Inc. (“EUI”) is a corporation incorporated under the laws of the Province of Alberta and is the parent company of EPCOR Collingwood Distribution Corp., (“EPCOR”) a corporation incorporated under the laws of the Province of Ontario. EUI’s electricity distribution system serves approximately 389,788 customers in the City of Edmonton, Alberta. EPCOR Utilities Inc.’s predecessor distribution utility, the Edmonton Electric Lighting and Power Company, was established in 1891. EUI has been actively participating in local distribution company’s (“LDCs”) sales processes in order to establish a regulated utility platform in Ontario with the goal of growing the business through future consolidation-driven acquisitions.