BARRY CARD 8:00 PM. To PRESENT A REPORT ON AN APPLICATION BY KERWOOD WIND INC. TO ONTARIO ENERGY BOARD.

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1 BARRY CARD 8:00 PM To PRESENT A REPORT ON AN APPLICATION BY KERWOOD WIND INC. TO ONTARIO ENERGY BOARD.

2 Barry R. Card BARRIS I I R & SOI R 11 OR Certified Spceialu:l - Municipal law I cut (itivernmenli Planning I And K._ t I kvelopinent I aw 5(4( 1(11)(ilAsi001) ( RI St:FM"! I.( I IN I \R10 N6.I 112 Il..1.1:1'110N1 ( i 1 I AC'SIMII I. 0) (51 Internet Address. corditfirwrogers runt January 13, 2014 Report Number One Public Agenda Application by Kerwood Wind, Inc. to Ontario Energy Board Mayor and Members of Council Township oladelaide Metcalfe Recommendation: I,egal Counsel recommends that this report he received in public session. A second report providing confidential advice and recommendations with respect to the matter should he considered in camera. Background: Kerwood Wind, Inc. (the "proponent'') has been in discussions with the Council, staff, the Municipality's engineering consultant and legal counsel for several months. concerning proposed activity related to the development or its "Kerwood - wind project. The proponent seeks various permissions and approvals, including the location of its electrical infrastructure, road improvements, access driveways and related issues, such as permission to cut down trees. At Kerwood's request, these permissions and approvals were to have been granted in a single document. to he known as a "Road Use Agreement-. Prior to Kerwood's request, the Municipality had adopted a template for such approvals. Kerwood did not find this template satisfactory and has proposed its own preferred Road Ilse Agreement wording. I reviewed one iteration of Kerwood's wording with the Council in open session on November 13, 201 I was instructed at that time to return to Council with a revised agreement, in final form, once the critical "Schedules- were in final form. I have been advised by staff and the engineer that these schedules are still not in final form. Kerwood reports the following: *Schedule A (approved plans) were discussed many times, but in its current form was discussed with the Township Engineer on December 13th *Schedule B (Decommissioning Report Text) was provided December 19th during these discussions, but is consistent with the report text that has been in the Township's hands since the spring of 2012 when we made our REA submission 1

3 Schedule C (Haul route) was provided on November 1st Schedule D (Entrance Location Drawings) is comprised of data that was provided to the Township from July 3rd through July 31st, and approved November 7th Schedule E (Permitted Road Work) was provided December 19th Schedule F (Emergency Service providers) was provided December 19th Schedule G (Drainage Services Guidelines) is a Township document, but was provided to us November 15th Discussions between the Municipality and Kerwood have continued since the last report to the Council. Kerwood requested a pre-release version of the evolving agreement. That was sent to Kerwood as a without prejudice draft on December On the evening of December , I received a copy ()Ian application made by Kerwood under Section 41 of the Electricity Act. The Clerk has a copy of this material, which is too lengthy to he included with this report, however it can be accessed by the public at: &sortd1=rs_dateregistered&rows=200 Section 41 of the Electricity Act Wind Farm developers have been found to fall within the provisions of Section 41 Electricity of the Act. and this provides them with access to the Ontario Energy Board tbr electrical infrastructure placement approval. Section 41 (excerpts here) says: Public streets and highways 41. (1) A transmitter or distributor may over. under or 00 any public street or highway, construct or install such structures, equipment and other facilities as it considers necessary JO,- the purpose of its transmission or distribution system, including poles and lines c. 15, Sched. A, s. 41 (1). No consent required (5) The exercise of powers under subsections (1), (2) and (3) does not require the consent of the owner of or any other person having an interest in the street or highway c. 15. Sched. A, s. 41 (5). Location (9) The location of structures, equipment. or facilities con.structed or installed under subsection (1) shall he agreed on by the transmitter or distributor and the owner of the.street or highway, and in case of disagreement shall he determined by the Board c. 15 S'ched. /1 v. 41 (9). The right to apply to the OM arises under subsection (9). The condition precedent to the application in is: the case of a disagreement". 2

4 Section 41 also deals with the subject of damages: Notice, compensation, etc. (7) Ifa transmitter or distributor exerciser a power of entry under this section. it shall. (a) provide reasonable notice of the entry to the miner or other person having authority over the street or highway; (b) in so far as is practicable. restore the street or highway to its original condition: and (c) provide compensation for any damages caused by the entry. (emphasis added) The OEB has no jurisdiction to deal with damages. The Alleged Dispute As far as 1 know, at the date of the application, there was no disagreement concerning the location of the infrastructure. The validity of the application. as it stands. is fairly in question for this reason. It should be noted that the 0111 does not have the power to impose a road use agreement, covering aspects of the request for permission which go beyond the scope of the legislation. Kerwood says this in its application: 5. In accordance with Section 41(9) of the Electricity Act. Kerwood, as the distributor and the lbwriship, as the owner fare Road Allowances. are required only to agree on the exact location of the Distribution System within the Road Allowances. which location all he sh determined by the Board in the event of a disagreement. The material filed in support of the application might reasonably be expected to identify the nature of the disagreement regarding location, however, it does not appear to do I have that. asked the proponent's legal counsel for particulars of the disagreement. Nothing has been provided. The material, at Exhibit B, tab 5 contains a chronology prepared by Kerwood. This is the relevant entry, which appears on schedule 1 at page (emphasis added): On December 13, 2013, Kerwood met with Township engineering stuff lo discuss, among 5 other things, drawings of. the proposed routing of the Distribution System within the Road 6 Allowances (in particular those drawings included at Exhibit B. Tab 4, Schedule I, 7 Appendix 13). with the expectation that these drawings would he included as a schedule to (( a. final form of Road (Ise Agreement. The Township engineers did not raise any concerns 9 with the drawings. In other words, a mere 10 days before Kerwood applied to the O1.?11, it had formed the opinion that there were no salient issues between the parties regarding the location of the electrical infrastructure. As an aside, the same chronology contains this linal entry: On the afternoon of Decenzber 20, 2013, the Townships solicitor sent Kerwood a substantially revised Road Use Agreement (see Appendix GG hereto for a copy of this agreement), which included several provisions that had not previously been discussed by the parties, and several unreasonable conditions, that have not brought the parties closer to reaching an agreement on the location of the Distribution System. 3

5 The problem that is identified here has no legitimate connection to the location of the electrical infrastructure. I spoke with the consulting engineer on Friday. January and was advised of certain technical deficiencies with the drawings. I have asked the engineer to provide a list of these deficiencies for distribution to staff and Kerwood. They do not pertain to the location issue. Essentially, the continuing issue with respect to the drawings has to do with detail. Given that Kerwood recognizes the need to identify the -exact location" which it proposes for the electrical infrastructure, the absence of precision on that score cannot have come as a surprise to Kerwood. In any event, Kerwood did not at any material time request approval of its electrical infrastructure plans in isolation from the proposed agreement. It has at all times preferred and proposed the agreement approach. Kerwood's Application to the OEB A review of the material discloses many (irrelevant) aspects of negotiations between the parties concerning the road use agreement but a lack of precision regarding the dispute about the location of infrastructure. Instead, it says (emphasis added): However; the Township has effectively refused, for approximately one-and-a-halfyears, to engage Kerwood in meaningful discussions on where in the Road Allowances the Distribution System will be located. Instead, the "township has insisted on conducting a series of. public meetings regarding installation of collector lines and developing a set of generic Road Use Agreements that are not specific to the Project' Despite KerwoodS efforts to provide increasingly detailed maps and engineering diagrams of the proposed Distribution System, the Township is now effectively refusing to have meaningful discussions with Kerwood regarding the location of the Distribution System or any proposed Road Use Agreement. The result of these events, which are described in further detail in Exhibit B, Tab 5 cchedule I, is a fundamental inability of the parties to reach an agreement regarding the location of the Distribution System in the Road Allowances. 8. Because Kerwood and the Township cannot reach an agreement with respect to the location of the Distribution System within the Road Allowances, the Applicant requests that the Board issue an order or orders, pursuant to Section 41(9) of the Electricity Act. establishing the location of the Distribution System within the Road Allowances. all as set out in Exhibit B, Mb 6, Schedule I. 9. Kerwood requests that the Board expedite its hearing of this application in accordance with Sections 2.01 and 7.01 of the Board's Rules of Practice and Procedure because (i) the only person directly affected by this application is the Township as the sole owner of the Road Allowances, and (ii) Kerwood received a REA for the Project on August 1, 2013, and its project schedule requires Distribution System construction to commence by March I am not aware of any request by Kerwood. outside the scope of the road use agreement negotiations, for approval of any particular plan showing only the location of the proposed infrastructure. The Written Evidence Presented by Kerwood 4

6 Kerwood is proposing that its application be considered in writing, rather than by means of a more conventional oral hearing process. The Board's Rules require written evidence. The material available on-line includes this material. A summary of the pre-filed evidence has been provided by Kerwood. In this summary. Kerwood asserts the following: PROPOSED ROAD USE AGREEVIENT The only outstanding issue with respect to KerwoodS use oldie Road Allowances is the exact location of the Distribution System within the Road Allowances. In this regard. Kerwood sought to negotiate a Road Use Agreement with the Township (the"proposed Agreement'', see Exhibit B, Tab -I, Schedule I. Appendix A), even though Kerwood is not aware of any statutory obligation to enter into such an agreement. However the Township has effectively refused, for approximately one-and-a-hall years, to engage Kerwood in meciningfid discussions on where in the Road Allowances the Distribution System will he located. Instead, the Thwnship has insisted on conducting a series of public meetings regarding installation of collector lines and developing a set of generic Road Use Agreements that are not specific to the Project. Despite Kerwoocl's efforts to provide increasingly detailed maps and engineering diagrams of the proposed Distribution :System, the lownship is now effectively relitsing to have meaningful discussions with Kern out( regarding the location of the Distribution System or any proposed Road Use Agreement. The result of these events, which are described in further detail in Exhibit 13, Rib 5 S'chedule I, is a fundamental inability of the parties to reach an agreement regatding the location ofrthe Distribution,S'v,s tem in the Road Allowances. This is what Kerwood has to say about the Municipality's position on the road use agreement: POTENTIAL lit4pa('ts Kerwood has attempted to ensure that the Township would not be prejudiced by the location of Distribution System within the Road Allowances (see Exhibit 13. Tab 7, Schedule 1). Under the Proposed Agreement, Kerwood would have provided certain benefits and protections to the Township in respect of the construction, installation, Operation, maintenance and decommissioning of the Distribution System (see Exhibit 13, itch Schedule I, Appendix A) For example, Kerwoocl would have undertaken the work at its own expense in accordance with good engineering practices, and used reasonable cfforts to avoid unnecessary adverse impacts on the public use of the Road Allowances. Kerwood would have also repaired the surface -any of Road Allowances and any municipal works damaged in the course of the work. Iforeover, Kerwood has conducted a detailed siting process and developed comprehensive mitigation measures jor the Project s environmental impacts. In contrast, the Thwriship:v. fail ore to enter into a Road Use Agreement could prejudice Kerwoocl For example, such failure is a potential source of delay in the development of the Project that can result in increased equipment storage, lost revenue, liquidated damages and other payments under the Project's feed-in tariff contract, and other costs.. Notably, it is the failure of the Municipality to enter into the form - agreement I desired by Kerwood that may cause these adverse impacts. I'hesc are Kerwood's own words. The chronology concludes as follows: 5

7 Effectively, the Township has refused for approximately one-and-a-half years. to meaningfully engage Kerwood in discussions on where in the Road Allowances the Distribution System will he located. instead, the Township has insisted on conducting a series of public meetings regarding installation of collector and developing a set of generic Road Use Agreements that are not.specific to the Project. Despite KerwoodS efforts to provide increasingly detailed maps and engineering diagrams of the proposed Distribution System, the Township is still effectively refusing to engage in nieuningfid discussions with Kerwood regarding the location of the Distribution System or any proposed Road Use Agreement. Contrary to its statutory obligation, the Township has repeatedly failed to negotiate with Kerwood and as a result, the parties have been unable to reach an agreement regarding the locution of the Distribution System within the Road Allowances. I disagree with this conclusion and will be recommending that the Municipality's response deal with it Schedule B includes copies of resolutions and other documents which have no discernible connection to the Section 41 application. These documents have evidently been included in the application for some other purpose. The last document in the package, appendix -, "G(.1 is my last draft of the proposed road use agreement. This was sent on a without prejudice basis. Its inclusion in the application is both improper and irrelevant, however, that document contains these words: 3.3 Permission Granted The Municipality approves and authorizes the fliwk identified 017 Schedules A. D and E. Finalization of the agreement was subject to agreement on other matters. In contrast to this fact, Kerwood says at Exhibit B. Tab 7, Schedule 1 (emphasis added): Page 2 of 2 decommissioning of the Distribution System / (see Exhibit B. "lab 4. Schedule I. Appendix A). For example, Kerwood would have undertaken the work at its own expense in accordance with good engineering practices. and used reasonable efforts to avoid unneces.sarti adverse impacts on the public use of the Road Allowances. Kerwooci would have also repaired the surface of Road Allowances or any municipal works damaged in the course of the work. AS a condition of its REA, Kerwood is required, at the end of the Project S usefiil life, to decommission the Project in accordance with the Ri,A and the requirements of the Ministry of the Environment. Given these measures, the Township faces no.significant prejudice regarding KerwoodS proposed location of the Distribution,System within the Road Allowances. However, should the Township continue to refuse to agree to the location of the Distribution System within the Road Allowances, Kerwood could be prejudiced. For example, the Townships constructive refusal to agree to a location for the Distribution System within the Road Allowances (which has given rise to the present Application) could result in increased equipment storage, lost revenue, liquidated damages' and other payments under the Project :s feed-in tariff contract. and other costs. Order Requested by Kerwood Although it might be concluded Irom the application and summary that the Section 41 application ha 6

8 been taken in aid of negotiations concerning the road use arrangement, over which the OEB does not have jurisdiction, the order which the application requests is within the Board's jurisdiction: ORDER SOUGHT Kerwood therefore applies to the Board pursuant to Section 41(9) of' the Electricity Act jor an order or orders establishing the locution of the Distribution System within the Road Allowances. all substantially in accordance with Kerwood 's plans as set out in E.vhibit B. Tali 6. Schedule 1 (Proposed Location of Distribution System Within Road Allowances). The "plans" referred to are found towards the end of the pdf material, at page 299 of 309 in part 2 of the application: 6.0 PROPOSED LOCATION OF THE DISTRIBUTION SYSTEM WITHIN THE ROAD ALLOWANCES Given that Kerwood and the Thwaship cannot agree to the location of the Distribution System within the Road Allowances, Kerwood requests that the Board issue 41,7 order pur.s uant to,s'ection 41(9) of the Electricity Act determining such location as follows: The Distribution System shall generally he located in the Road Allowances listed on ahibit 13, Tab 6, Schedule 1, Appendix A, and a, ' close as reasonably possible to the relevant locations shown on the maps included in Exhibit R, Tab 4. Schedule 1. Appendix B. Where practicable, and where it meets all applicable engineering, enrinmmental and health and safety standards, the Distribution System lines shall he located as close as possible to the abutting property line. As set out above, Kerwood :s proposal for Distribution,SYstem installation would generally he confined to a narrow strip that is as close to the right of way limit (i.e. the abutting property line) as possible without damaging any fence lines or other property markers. Furthermore, Kerwood:c proposal allows for limited to deviate from this corridor to meet applicable engineering, environmental and health and safety standards, or where it is not practicable to Ibilow the corridor in ct particular area. Because there are no plans showing the electrical infrastructure in isolation from the other permissions Kerwood had sought from the municipality, the requested order would refer to a list of affected road segments (which begins at page 301 of the same tab) and also to mapping, found Exhibit at B. Tab 4. Schedule 1,.Appendix B. That can he viewed at page in the first part of the application. The provenance of the drawing displayed on my computer is uncertain. It is referred "Distribution to as System Mapping" and shows areas of road desired work. rather than what is present (example. page 156 of 325 in part 1), which the Board would not he able to approve. There was no date on the drawing. 1 have requested clarification of the proponent's request re the mapping. Summary Kerwood has elected to bypass the Council and is proceeding under Section 41 of Electricity the Ac!. Kerwood cites a "constructive" refusal of it. plans for the electrical infrastructure as its reason for proceeding via Section 41. It is implicit from that statement that no refusal has actually taken place. The OEB has the power to approve the location of the electrical infrastructure which Kerwood proposes, however, the location of the proposed electrical infrastructure has not been materially in dispute. Kerwood's drawings respecting location and specifications had not been presented in final form for approval on their own before the Section 41 application was commenced. The parties had not 7

9 joined issue on such drawings. The application gives no particulars of a dispute concerning "location.' and none are known. It was the language of the proposed road use agreement that was in dispute. These facts may be a barrier to consideration of the application by the MB. If the Section 41 application does proceed. arrangements concerning the proposed location of the electrical infrastructure will be settled through that process. The road use agreement will not be settled by the OFB. No road use agreement is required under the Kerwood considers such an agreement advisable, it can (as in this case) propose same. Neither party can require the other to enter into a road use agreement. Neither party can dictate the terms of such an agreement. In the absence of an agreement, municipal permissions must be obtained with respect to road improvements. Municipal damages are recoverable under the legislation, by action where necessary. The Section 41 process mandates the consideration of the electrical infrastructure plans separate and apart from other wind project issues. Those plans will be the locus olour response. I will respond to the application in accordance with the Board's Rules and report to the Council from time to time as the matter proceeds. _--- YourK very truly. BRC:jmh Barry R. (lard 8