5. Enbridge Gas is also seeking approval of the HAF to be used, as appropriate, in the allocation of capital costs to individual or multiple customers, on a peak hour basis, in the economic feasibility analysis for any:

• Development Project, defined as a system expansion project that will expand capacity over a certain area to serve increasing demands from existing and/or new customers. It may include a mix of large and small volume customers.

System Expansion Surcharge (SES)

6. Enbridge Gas is requesting that the Board approve a volumetric based SES of $0.23 per cubic metre that would be applicable to all small volume customers served by Community Expansion Projects as defined above. The SES requested would be a constant volumetric per cubic metre charge that appears on small volume customer bills in addition to the regular Board approved rates for the applicable rate class. While Enbridge Gas's approved rates will change over time, the SES will not. Consistent with the current versions of the SES which have previously been approved by the Board, the form of SES proposed in this application will be considered revenue and treated as such for the purpose of the economic feasibility analyses.

7. The SES will allow customers to be served by Community Expansion Projects to contribute a portion of their savings from converting to natural gas towards natural gas system expansion feasibility. The SES addresses the Board's determination in the Generic Proceeding on Community Expansion, EB-2016-0004 (the "Generic Proceeding"), that "for many communities a higher gas distribution rate would be more than offset by the savings these customers would realize over time by converting to natural gas. This is true even when one considers the costs of