The City’s allegation that transmission facilities are trespassing on a highway is unlikely to succeed. Surrey taxpayers and BC Hydro’s ratepayers will pay the cost of proving this point.
Growing pains
The City of Surrey is a fast-growing municipality in Vancouver’s lower mainland with a population of around 700 thousand people, expected to exceed one million by 2046.
To support its expansion, the City wants to extend 72nd Avenue, completing an approximately 4 km gap between 152 Street and the Pacific Highway (Highway 15), providing an additional east-west road corridor for traffic.
The proposed extension was legally designated as a highway as long ago as 1875, but no road ever appears to have been built. The route goes through farmland, and there’s no public access.
There’s just one problem: a BC Hydro transmission tower is standing in the way.
The cost of progress
Actually, this isn’t the only problem. In addition to the tower built on the designated highway, three transmission lines cross the proposed new road, and changes need to be made to all three of them.
BC Hydro has offered to make the changes necessary to allow the City to extend the road, but it expects the City to pay the cost – estimated to be up to $39 million ($41 million with taxes). These are the utility’s standard terms for transmission relocations, which the City has agreed to on previous occasions.
The $41 million price tag might seem high, but it’s not entirely surprising, as these are not just any transmission lines. Two of them are 500 kV lines, the highest voltage in BC Hydro’s system, part of the network that brings electricity to the Lower Mainland and allows us to trade electricity with the United States (for now, anyway).
They are also part of the “bulk electric system”, an integrated high-voltage network spanning Canada, the US and Mexico. An entire thicket of regulations has evolved since the Northeast blackout of 2003 to ensure electricity reliability (3,641 pages at the last count), covering the construction and operation of transmission facilities. BC Hydro has been heavily penalized in the past for violations of these standards, and will want to be sure these changes are done properly.
For example, BC Hydro is concerned about the City’s plans to place two metres of fill on the road, which presents a “risk of settlement” for its nearby towers. The City has not responded to the utility’s request for a geotechnical report on the matter.
Here come the lawyers
Well, actually the City did respond, after a fashion. On January 10 they filed a notice of civil claim at BC’s Supreme Court alleging that BC Hydro is trespassing on their highway, and that it should “remove its Offending Facilities” at its own cost, i.e. BC Hydro’s ratepayers would pay. For good measure, the City is also claiming unspecified damages.
There are two issues at play here: whether BC Hydro has the right to have its facilities where they are at present, and who should pay to move them to accommodate the City’s request. On both counts, the City’s case is weak.
No trespass
The three transmission lines were built in 1952, 1967 and 1976 respectively. Section 45 of the Utilities Commission Act (Act) establishes that public utilities have the authorization to operate all facilities that were in operation as of September 11, 1980, which applies to all three transmission lines and the “offending” tower. Further, section 121 of the Act makes it clear that nothing a municipality can do supersedes an authorization granted to a public utility.
In other words, BC Hydro has the right to have its transmission facilities where they are, and the City has no legal powers to force the utility to move them.
Cost causation
A foundational principle of utility regulation is cost causation – whatever it reasonably costs to provide your service, you pay for. But equally, you shouldn’t have to pay any more than that – the costs of someone else’s service, for instance.
This is why BC Hydro proposes charging the City for relocating the transmission facilities. Ratepayers shouldn’t pay the cost, since but for the City’s request, the transmission facilities are just fine where they are.
Clarity
BC Hydro has filed an application with the BC Utilities Commission (BCUC) to “clarify” its rights to use the land and confirm that the City should pay for moving the transmission facilities to accommodate the extension of 72nd Avenue.
I know I’ve grumbled about the BCUC giving BC Hydro an easy ride recently, but this time I think BC Hydro has a strong case, and the BCUC should quickly and wholeheartedly support it.
For the BCUC to find that BC Hydro was trespassing would be inconsistent with the Act and overturn decades of precedent. It would also undermine the entire provincial energy system – both gas pipelines and electricity transmission lines across BC rely on using municipal property.
Fortunately, the Act is clear that one body, the BCUC, has the legal power to decide whether public utilities’ systems may operate on municipal lands. This gives the BCUC the ability to consider the public interest from a provincial perspective rather than the narrow interests of any one municipality.
The Act is also clear that the BCUC can decide who should pay for relocating transmission facilities. Sections 32 and 36 both allow the BCUC to set the terms for a utility’s use of municipal land, which includes relocations. The BCUC, as it has done in the past, should apply the cost causation principle and find that the City should pay for the relocation, not BC Hydro’s ratepayers.
The BCUC might choose to probe a little into the cost estimate, though. BC Hydro has no incentive to keep the costs down, so some due diligence might be worthwhile. The BCUC might even order that the City needn’t pay the full cost estimate up front. The estimate is a wide range, from $18 million to $39 million (before taxes), suggesting that there may be some room for flexibility.
Strong precedents
Twice in recent years municipalities have challenged the BCUC’s authority in their lands, and in both cases the Court of Appeal has sided with the regulator.
In 2021, the Court of Appeal confirmed that the BCUC had the right to allow FortisBC, the province’s largest gas utility, to place its gas pipeline under a road in the City of Coquitlam (and even to leave it there once it was decommissioned).
Similarly, in 2024 the Court of Appeal confirmed that the BCUC had the right to impose terms on an agreement between the City of Richmond and FortisBC when Richmond requested the utility move its gas pipeline to accommodate a municipal project (sound familiar?).
Hidden costs
It’s not just the $41 million cost of relocating the transmission facilities that’s at stake here; the City’s legal challenge is going to cost money too.
It’s understandable that the City would like to avoid the cost of relocating the transmission facilities, but the court filing is the legal equivalent of a Hail Mary pass – a last-minute, low-probability attempt to ward off defeat. The weakness of the case probably explains why the City went straight to court, attempting to bypass the BCUC, the body that normally adjudicates matters between municipalities and public utilities.
As a result, the challenge is likely to be a waste of Surrey taxpayers’ money.
But BC Hydro will also incur costs, both to defend itself in court, and to obtain the clarity it needs from the BCUC. It would be quite reasonable if the BCUC made the City pay these costs, assuming it ultimately finds in favour of BC Hydro. Perhaps it could direct BC Hydro to add its legal costs to the City’s bill for relocating the transmission facilities?
The BCUC’s procedural timetable to review the matter concludes on April 22. Expect lots of lawyerly games between now and then.