I. OVERVIEW AND ORGANIZATION OF REPORT

1. The purpose of this report is to provide a fundamental understanding of how electricity systems are planned with a particular focus on the Province of Ontario's (“Ontario”) electricity system. More specifically, this report will reflect on recent transmission planning in Ontario with respect to the impact of the Ontario Feed-in Tariff (“FIT”) Program and the Bruce to Milton Transmission Reinforcement Project.

2. Electricity is unlike any other commodity. It is not easily stored and must be consumed at virtually the moment it is generated. As a result, electricity system planning is complex. A proper understanding of the allegations at issue in this arbitration requires a fundamental grounding in the nature of electricity, the unique attributes of different forms of electricity generation, how electricity is delivered to consumers and how electricity systems are planned to ensure a safe and reliable supply of electricity for consumers.

3. This report provides a roadmap through these complexities by addressing the following topics:

 Section 2 examines the basic characteristics of electricity supply and the properties of various generation sources, including renewable energy sources;

 Section 3 provides an overview of electricity markets;

 Section 4 describes the nature and operation of transmission and distribution systems;

 Section 5 describes electricity planning processes and the roles of reliable supply, economic efficiency and sustainability in those processes;

 Section 6 provides an account of the evolution of Ontario’s electricity market since 1998 and the development of renewable energy procurement programs in Ontario;

 Section 7 describes the need for, and development of, the Bruce to Milton Transmission Reinforcement Project; and

 Section 8 sets out my conclusions.