Despite a tight vote in the legislature, the steady erosion of BCUC independence continues. Some of the government’s statements in the debate need correcting.
Introduction
The BC Legislature recently debated Bill 31, also known as the Energy Statutes Amendment Act, 2025. Bill 31 enables BC Hydro to share ownership of its proposed North Coast Transmission Line with selected First Nations, and gives the government direct control over which new data centres in the province get electricity.
(Bill 31 applies not only to data centres but also to cryptocurrency miners, artificial intelligence businesses and hydrogen export facilities – to keep things simple, I’ll just refer to data centres).
The debate frequently turned to the role of the BC Utilities Commission (BCUC), the regulator that purportedly oversees BC Hydro, the provincially owned electric utility. This article examines the positions taken by the energy minister, Adrian Dix, who led the government’s defence of the Bill.
Project review
Bill 31 does not in itself exempt the proposed North Coast Transmission Line project from review by the BCUC; that does not require new legislation. However, this didn’t stop opposition members of the legislative assembly from asking questions about the BCUC’s role in the project.
At one point, Minister Dix stated:
The government and B.C. Hydro have already established the need for the project. That’s why, separate from the legislation, there’s an exemption from the CPCN [Certificate of Public Convenience and Necessity, which can only be issued by the BCUC], which the member has been briefed on and knows about.
In a general sense, BCUC has oversight of B.C. Hydro but doesn’t make investment decisions of this sort. They review B.C. Hydro’s plans and their rate applications and other issues, but they wouldn’t be dealing with this normally, except in the case of projects over $250 million, for CPCN.
There are several problems with this statement.
First, the BCUC does, in fact, make decisions on proposed investments of this sort. Section 45 of the Utilities Commission Act is quite clear that a public utility “must not begin the construction or operation” of any project without the BCUC’s permission. And, unless the government formally changes the Act, BC Hydro remains a public utility.
Second, the BCUC review of a proposed public utility project considers much more than merely whether the need has been established, as the Minister implied. The BCUC’s guidelines require utilities to demonstrate that their project is the best alternative, and that the public has been adequately consulted. Being a crown corporation, BC Hydro has additional obligations to satisfy the BCUC that its duty to consult First Nations has been met.
Third, to say that the BCUC “wouldn’t be dealing with this normally, except in the case of projects over $250 million” is not correct. The North Coast Transmission Line is currently forecast to cost $6 billion, considerably over the $250 million figure mentioned by the Minister, so the BCUC would absolutely be “dealing with this normally.”
But even if a BC Hydro power system project were under $250 million, the BCUC would still review it. For the sake of efficiency, the BCUC has agreed that smaller BC Hydro projects do not normally require a CPCN; instead, the BCUC reviews them when it looks at BC Hydro’s rates applications, and can still order a CPCN application if it chooses.
You might ask why the 2026-2027 rates application didn’t contain the usual list of smaller projects for review. Well, that was because the government had directed the BCUC to rubber stamp BC Hydro’s rates application within 10 days. The BCUC could still have demanded the list of smaller projects and reviewed them in a separate proceeding, but given its current level of independent-mindedness, that was hardly likely to happen.
The Minister was wrong to downplay and deny the BCUC’s decision-making role over BC Hydro’s projects. What the government is doing is not regulatory “business as usual”; it’s overriding a key role of the “independent” regulator and ensuring that the North Coast Transmission Line does not get the independent scrutiny envisioned in the Utilities Commission Act.
And since the government also exempted the project from the need for an Environmental Assessment Certificate, First Nations have lost both formal opportunities to express any opposition. That will have to come through the courts.
Allocation of electricity
Bill 31 also deals with how new requests for electricity from data centres are handled.
Today, requests for new electricity service from large customers go into a first-come-first-served “interconnection queue”, and customers get service when BC Hydro is ready. The recent spike in demand from data centres and the like has caused this queue to lengthen.
The government wants electricity to be available to serve new liquified natural gas (LNG) and mining projects, both of which would create jobs and much-needed tax revenues, and which would generate fewer greenhouse gas emissions if they were electrified. But these projects would be stuck behind other requests in BC Hydro’s interconnection queue.
Matters are made worse by BC Hydro having to resort to imports just to serve its current customers, and the utility forecasts an energy deficit by 2031 even without new data centre load.
The government’s solution, enabled by Bill 31, is to allocate a limited amount of BC Hydro’s electricity to new data centres every two years. BC Hydro will then distribute the allocation among supplicant data centres, deciding which will receive electricity and which won’t; all other projects will still be handled in the existing interconnection queue.
What’s the problem?
Minister Dix started out well enough, asserting that “It’s not the BCUC’s role to determine economic policy.” No dispute from me on this point; it’s well recognized that government sets policy, and rationing scarce electricity is a policy choice. There are other policy options besides rationing, possibly better ones, but that’s a subject for another day.
I also concur when the Minister said:
Well, the commission [BCUC] isn’t built for picking winners and losers in allocation processes. That’s not its role. It has never been its role. We wouldn’t expect it would be its role in the future. They’re not set up for picking winners and losers.
Where I part company with Minister Dix is when he stated:
It has been the role of B.C. Hydro since its inception to make decisions about the allocation of electricity based on what they can deliver, not just through generation but through transmission and distribution in the system.
Minister Dix misrepresents how utility regulation works. BC Hydro should not “make decisions about the allocation of electricity based on what they can deliver.” On the contrary, BC Hydro has an obligation to serve anyone who asks.
The obligation to serve is an essential part of the “regulatory compact” – in other words, in return for being granted a monopoly, a public utility must agree to serve customers. After all, being a monopoly means the customer has no other choice. This isn’t just a matter of convention; the obligation to serve is baked into Sections 28 – 30 of the Utilities Commission Act.
Bill 31 negates the regulatory compact, and means that data centres who want service may be denied electricity altogether, and have no alternatives because of BC Hydro’s monopoly.
And despite the Minister’s protestations, the BCUC does regulate this area, ensuring that BC Hydro fulfills its obligation to serve and does not discriminate unduly between customers. If BC Hydro declined to serve a customer, or put another customer ahead of them in the queue, the customer could complain to the BCUC, who could order BC Hydro to change its ways.
The BCUC could provide independent oversight of BC Hydro’s allocation of electricity to data centres, but the government has chosen to cut the BCUC out of the picture entirely. BC Hydro will now pick the winners and losers under cabinet direction. No worries, then!
Rate setting
In addition to the ability to ration electricity, Bill 31 also gives the government power to set electricity rates for new data centres. During the debate, Minister Dix claimed at least twice that the BCUC still had a role in rate-setting (“BCUC regulates rates in this province” and “The B.C. Utilities Commission will continue to oversee rates”).
These statements are hard to reconcile with the fact that cabinet has just set BC Hydro’s rates for 2026 and 2027, and Bill 31 takes this role away from the BCUC permanently for new data centres, but let’s just let that lie.
Where it got really confusing was when the Minister changed tack, saying:
Government, of course, on occasion does have the power to set rates, and it did through most of the previous government’s last half. But set that aside, and BCUC doesn’t set rates. It reviews rate applications by B.C. Hydro. (emphasis added)
He even got a little testy at one point:
I’m happy to answer this question for the third or fourth time. If, in fact, in the process, one of the conditions looked at [in selecting which data centres would receive a ration of electricity] is price and return to the people of the province, return to B.C. Hydro, that’s the ability to set rates. As we’ve established and said, maybe more than a dozen times, the B.C. Utilities Commission doesn’t set rates. (emphasis added)
Again, the Minister is not correct, and it’s making me a bit testy too. The BCUC actually does set public utility rates in BC. This is pretty clearly set out in Section 60 of the Utilities Commission Act, helpfully labelled “Setting of rates”, which describes the BCUC’s role in setting rates.
BC Hydro applies for a rate, based on the revenue it claims to need to deliver safe and reliable service, but that’s just the starting point. The BCUC examines this evidence, and may disallow spending that it considers unnecessary or unreasonable. Alternatively, the BCUC may encourage more spending if there is a risk of future reliability problems, for example if an electrical utility were to scrimp on tree trimming expense as a short-term fix to keep its rates low.
Unless overridden by cabinet, the Utilities Commission Act gives the BCUC the sole power to set rates for BC Hydro and other public utilities in BC. To say that the BCUC merely “reviews” rates that are set by BC Hydro suggests the Minister thinks the BCUC would not have the temerity to question anything BC Hydro asked for. This may be true, but the fact remains the BCUC has the authority to set public utility rates, not merely “review” them.
Conclusion
Bill 31 passed, although it required the tie-breaking vote of the Speaker, as all opposition parties lined up against the government. It appears from the questions asked during the legislative debate that erosion of the BCUC’s independence was a factor in the voting.
This is about the only positive thing that good governance fans can take away from all this. As the government continues to demonstrate its autocratic tendencies, there remain some legislators who appear to value an independent regulator for BC Hydro.