The term “public utility” is one of the most important definitions in the Utilities Commission Act. Companies that meet the definition are public utilities, which means they are regulated by the BCUC, and are subject to all the obligations of the Act. The term is sometimes shortened to “utility”, but in the context of regulation, it has the same meaning as public utility.
Whether a company is a public utility is a matter of legal interpretation. The words of the Act are the first step, but in the case of ambiguity, the intent of the legislature becomes relevant. While the Act does not explain why a public utility is defined the way it is, it is reasonable to assume that the definition emerged from the history of regulation, which is related to society’s desire to ensure essential services are provided at reasonable cost, and its concern about the possible abuse of monopoly power.
The definition of a public utility is very broad, and probably includes companies that the legislature never intended. For example, as the BCUC has noted, convenience stores selling flashlight batteries might meet the definition (sometimes called the “London Drugs problem”). While the BCUC must regulate all public utilities (i.e. it has no powers to forbear from regulation), it turns a blind eye to some of the more extreme interpretations of the definition of a public utility.
Conversely, companies that do not meet the definition in the Act are not public utilities, and for the most part are not regulated by the BCUC or subject to the obligations of the Act. The BCUC has no power to determine that a company not meeting the definition in the Act is a public utility, no matter how much it might think it is in the public interest to do so.
There are, however, some sections of the act that apply to “persons”, rather than public utilities. In these cases, the BCUC may have regulatory powers over a person who is not, or is not yet, a public utility. For example, section 45 of the Act states that:
“a person must not begin the construction or operation of a public utility plant or system, or an extension of either, without first obtaining from the commission a certificate that public convenience and necessity require or will require the construction or operation”
The use of the term “person” in section 45 is probably intended to ensure that the BCUC has the power to decide whether someone who intends to be a public utility, but does not yet meet the definition, can start building infrastructure that would eventually make them a public utility.
Here are some of the key elements of the definition of a public utility:
Location and status
The definition applies only to a person who “owns or operates in British Columbia, equipment or facilities”.
The location “in British Columbia” refers to the act of owning or operating, not to the person. In other words, a company does not need to be based in BC, it just needs to own or operate equipment or facilities in the province for it to be a public utility.
A company must have the status of an owner or operator of equipment or facilities to be a public utility. A company that only performed meter reading would probably not be considered as owning or operating equipment. However, a company that leases rather than owns the equipment it operates is still a public utility.
Regulated service
A company is only a public utility if it provides a “regulated service.” While this term is not explicitly defined in the Act, it is referred to, for example in sections 63 and 64. The use of the term “regulated service” refers to the service(s) offered that make a company a public utility, that is:
“the production, generation, storage, transmission, sale, delivery or provision of electricity, natural gas, steam or any other agent for the production of light, heat, cold or power to or for the public or a corporation for compensation”
The list of actions that define a public utility is broad: “the production, generation, storage, transmission, sale, delivery or provision”. However, some roles would be likely be outside its scope, such as a company that only performed pipeline inspection services.
A regulated service must be performed “for compensation.” If a payment is made directly for a regulated service, this is quite straightforward. It is not so simple if the regulated service is bundled with another service, such as electricity provided as part of a hotel room rental or a parking spot for an electric car.
While the definition is quite broad in terms of energy types, including the phrase “any other agent”, specific exclusions are provided for those who are in the petroleum or geothermal sectors, both of which are regulated under other legislation.
Exceptions
Municipalities who provide regulated services within their own boundaries are not public utilities; however, if, like Nelson Hydro, they provide regulated services to customers outside their boundaries, they are public utilities and the services provided to customers outside the city boundaries are regulated by the BCUC.
The BCUC determined in an inquiry that municipalities must own or operate the relevant equipment or facilities for the exception to the definition of public utility to apply. A company not a municipality does not qualify for the exception to the definition even if it is 100 percent owned by a municipality.
Someone that only provides a regulated service to their tenants, where the tenancy period is less than 5 years, or to their employees, does not meet the definition of a public utility.
An example of the BCUC’s interpretation of the definition is the case of Powell River Energy Inc. The company argued that it was not a public utility because it only sold energy to a related entity with the same parent company, who should be considered the same person. The BCUC disagreed, and found the company to be a public utility because it is a separate legal person from the related entity to whom it sold the energy.
An example of the scope of regulated services is the case of Wyse Meter Solutions Inc. The company argued it was not a public utility because, although it installed and operated metering equipment to measure electricity usage and invoiced users for their electricity, the definition of a public utility in the Utilities Commission Act did not specifically include sub-metering as a regulated service. Further, the company never took ownership of the electricity that passed through its meters. The BCUC disagreed, on the grounds that the company’s equipment is used for the sale and provision of electricity, and it is therefore a public utility.
The BCUC has jurisdiction over a public utility even if that company also provides services other than regulated services. The BCUC does not regulate the non-regulated services directly; however, it is entitled to examine whether they have any effect on the regulated services, for example if a company were subsidizing a non-regulated service with revenues from its regulated services.
The BCUC has occasionally exempted individual companies or classes of company from selected aspects of regulation, where the public interest would not be harmed. The BCUC may do this pursuant to section 88 (3) of the Act, with the approval of the BC government. Once an exemption is granted, any companies meeting the definition of the exemption are still public utilities, but are exempt from the operation of specified sections of the Act. For example, the BCUC has issued a class exemption for landlords providing electricity to tenants whose leases are five years or more, so long as they charge no more than BC Hydro would charge the same tenants.
Once a company becomes a public utility, it remains so until it ceases to meet the definition. For that, it would have to cease providing regulated services, which it cannot do without the consent of the BCUC. Section 41 of the Act prohibits a public utility discontinuing service, and section 52 prohibits the disposition of public utility property. In 2011, the BCUC approved an application from Bird’s Eye Cove Estates Ltd. to cease to be a public utility.