Lil’wat Nation demands BC Hydro pay more for its privately generated electricity because of Aboriginal ownership, citing DRIPA. BC’s Attorney General argues they should not.
Introduction
In December, the BC Court of Appeal’s Gitxaala decision found that the United Nations Declaration on the Rights of Indigenous Peoples (aka UNDRIP) sets the “minimum standards” though which BC laws should be interpreted. This means Aboriginal groups can use the courts to challenge BC laws they believe are inconsistent with UNDRIP.
This followed on from the August 2025 Supreme Court of BC’s Cowichan decision, which concluded that Aboriginal title to land is “senior” to private ownership.
Judges in these decisions invoked the 2019 BC Declaration on the Rights of Indigenous Peoples Act (aka DRIPA) and a related 2021 change to the Interpretation Act, both of which were promoted by David Eby, first as Attorney General, latterly as Premier. He has since referred to the “toxic” uncertainty caused by the courts, based on the laws he introduced.
Now, another court case involving DRIPA is underway which could provide yet more toxic uncertainty, this time to electricity costs in the province. It could also have wider ramifications for the whole economy.
Rockford files
Rockford Energy Corporation is an independent power producer (IPP) which owns and operates a run-of-river hydroelectric facility on Brandywine Creek near Whistler BC. It is one of many companies that set up at the turn of the century to sell power to BC Hydro, at a time when the government was seeking to expand private sector investment in energy.
Rockford’s Original Contract with BC Hydro was set to expire on October 11, 2025. In the final year of the contract it was receiving $69.48 per MWh for its energy. (this and other facts are from public Court documents, but I can’t provide links as they are not available on the internet)
The hydroelectric facility sits on land claimed by Lil’wat and Squamish Nations. In 2023, Lil’wat acquired 51 percent of Eco Flow, which in turn owns 100 percent of Rockford.
Garnering renewals
Many of BC Hydro’s contracts signed with independent power producers in the early 2000’s have been coming up for renewal in recent years. Partly in response to concerns raised by the BC Utilities Commission (BCUC) about the cost of this energy, BC Hydro developed a standardized program for renewals in 2022.
Under the scheme, for which Rockford qualifies, independent power producers could sign up for a 20-year renewal at $58 per megawatt hour (MWh) in 2023, plus an annual increase of half the rate of consumer price inflation thereafter.
The BCUC accepted BC Hydro’s approach as being “adequate” for planning purposes, noting that specific renewal contracts still had to be filed for acceptance under section 71 of the Utilities Commission Act.
BC Hydro says that it has signed eleven renewals under the program, all of which have been approved by the BCUC.
Things get Rocky
Rockford, however, was not prepared to accept the price on offer, noting that the winners of BC Hydro’s 2024 Call for Power, which like Rockford have Aboriginal ownership, will receive an average of $86 per MWh.
To allow negotiations to continue, BC Hydro agreed to enter into a new contract (approved by BCUC) after the Original Contract expired. However, negotiations appear to have broken down, and on March 10 this year, Lil’wat and Rockford filed a petition in the Supreme Court of BC.
Lil’wat and Rockford accuse BC Hydro of failing to consult Lil’wat about the renewal program and to “accommodate their interests”. They base their claim on section 35 of the Constitution Act and section 3 of DRIPA, and the seminal Haida decision which found that the Crown (which includes BC Hydro) has a duty to consult and accommodate Aboriginal groups if its conduct “might adversely affect” Aboriginal right or title.
The accommodation Lil’wat and Rockford are seeking is a higher price for their energy than they would receive under BC Hydro’s standard contract renewals program. They argue that BC Hydro’s “take it or leave it” approach is not appropriate for the Crown when consulting with Aboriginal groups.
Lil’wat claims that without a higher price it won’t be able to finance its continued ownership in the hydroelectric project, causing it to be unable to support “the social and economic objectives of the Lil’wat Nation from the use of its lands”.
Response
BC Hydro disagrees. They claim they have no duty to consult Lil’wat about the Rockford contract renewal because the hydroelectric facility in question is already operating (with Lil’wat’s consent) and Lil’wat invested in it “well after operations commenced and after the terms of a future [contract renewal] were announced”.
They also provide evidence of meetings with both Rockford and Lil’wat during the development of the renewal program, and claim the standard renewal price was shared with them prior to Lil’wat’s acquisition of the majority interest in Rockford.
BC Hydro confirmed that they were not willing to accommodate Lil’wat by paying Rockford more than the standard renewal price. They cite the Rio Tinto decision which determined that accommodations do not “extend to adverse impacts on the negotiating position of an Aboriginal group”.
They also point out that Rockford had alternative potential buyers for its energy, including other utilities (such as Fortis) and energy marketers, or they could export it to the US themselves, as two other independent power producers who were eligible under the renewal program have chosen to do.
Analysis
In economic terms, BC Hydro’s “take it or leave it” approach to independent power producer contract renewals is reasonable.
Independent power producers have limited alternatives, as the government has chosen not to allow electricity customers in BC to buy from anyone other than BC Hydro (something I think is poor public policy, but those are the rules of the game).
Other than selling to BC Hydro, their best alternative is probably to export the power, but most independent power producers prefer to take BC Hydro’s offer rather than go to the effort and risk of exporting the power themselves.
If BC Hydro paid existing independent power producers more than their best alternative, it would be paying more than it needs to. And, more importantly, so would BC Hydro’s customers.
Rockford argues that it should receive the higher price that BC Hydro is paying to encourage investors to build new facilities in the province, but this conflates two quite different markets. While these new facilities must be partially Indigenous owned, that’s not why they are receiving more for their electricity.
BC Hydro does not have the same power over global capital markets as it does over captive suppliers in BC. It must offer a sufficiently attractive price for investors to bring their money to the province and build new facilities at today’s costs, which are much higher than they were 20 years ago. These investors have choices elsewhere in the world; they don’t need to come to BC.
For these reasons, the difference between the contract renewal price and the price of energy from new facilities makes economic sense, and is good for BC’s electricity ratepayers. Rockford’s argument in a letter to BC Hydro that “An electron is an electron” may work in a physics class, but it isn’t a useful way to think of how electricity markets work in BC.
Legal case
But the petitioners’ argument wasn’t based on economics. They want more money simply because Rockford is now part-owned by Lil’wat, an Aboriginal group, and they believe this entitles them to be treated differently to other BC Hydro suppliers.
BC Hydro should have a strong case. The Haida decision requires BC Hydro to consult Lil’wat if it contemplates conduct that may adversely affect its right or title, but BC Hydro is engaging in no such conduct.
If BC Hydro had done nothing last October, the Original Contract would have expired, and Rockford and Lil’wat would have stopped earning revenues. Lil’wat’s rights here were to earn absolutely nothing from BC Hydro after October.
Far from conduct that would adversely affect its rights, Lil’wat wants BC Hydro to improve its economic position by giving Rockford a new contract, and at a higher price than BC Hydro needs to pay. This desire for more money should not be ground for consultation, let alone accommodation.
In the words of the Attorney General, the Supreme Court of Canada’s Rio Tinto decision “expressly cautioned against” conflating the principles of consultation and accommodation with commercial negotiations. This appears to be exactly what Lil’wat and Rockford are attempting to do in this case.
Drip…Drip…DRIPA
The wild card, however, is DRIPA.
Last year’s Gitxaala decision found that courts can rule on inconsistencies between BC law and UNDRIP. In Gitxaala, a government online mineral claims registration system was found to be inconsistent with UNDRIP. It’s not a big stretch to think that the Court could now use DRIPA to find BC Hydro’s renewals program isn’t consistent with UNDRIP either.
UNDRIP section 19 says:
“States shall consult and cooperate in good faith with the indigenous peoples concerned through their own representative institutions in order to obtain their free, prior and informed consent before adopting and implementing legislative or administrative measures that may affect them.” (my emphasis)
There’s no doubt that the standard BC Hydro renewal price “may affect” Lil’wat, in the sense that it limits how much they might earn from their investment in Rockford. While that might not have won them the case in the past, having UNDRIP as our law may have changed that.
Conclusion
BC Hydro was correct to stick to its approach on Rockford’s contract renewal. It must have been tempting to just pay more to make the problem go away, and ratepayers would have (unknowingly) picked up the tab.
Now, the Court will have to decide whether Lil’wat’s acquisition of an existing private business with an expiring contract requires BC Hydro to treat that business differently than it otherwise would have. It will make this decision in the light of the Gitxaala case, which found that UNDRIP is the law in BC.
If BC Hydro loses this case, there could be some pretty serious consequences. It has contracts with over 100 independent power producers generating approximately 25 percent of its electricity. If each of them were to be acquired by an Aboriginal group and receive a higher price as a result, it would significantly increase electricity bills in the province.
But the effects go beyond electricity bills, and this is no doubt why the Attorney General is supporting BC Hydro in its case.
The Attorney General states in their submission that a win for the Lil’wat and Rockford would effectively impose “differential costs on contracts … where Nations have invested in a business venture, and an implicit obligation to insulate their investments in such businesses from market risks.”
In other words, if BC Hydro loses this case, all BC government contracts are at risk of higher costs if the supplier has Aboriginal ownership, adding to existing economic uncertainty in the Province.
And if this happens because of DRIPA, Premier Eby will have only himself to blame.