Section 88(3) of the Utilities Commission Act enables the BCUC to exempt public utilities from some or all aspects of regulation under the Act.

This is distinct from a ministerial exemption, which is granted under section 22 of the Act. Unlike a ministerial exemption, a BCUC exemption may be granted for any or all sections of the Act.

To issue an exemption order, the BCUC must first seek the permission of the BC government, specifically the minister responsible for administering the Hydro and Power Authority Act. It is up to this minister to determine whether it is in the public interest for the exemption to be granted.

The BCUC may issue an exemption for a single public utility, such as its order exempting Vancouver Airport from regulation with respect to its resale of natural gas to its tenants. Alternatively, the BCUC may exempt an entire class of public utility, for example when it exempted from regulation landlords selling electricity to tenants having leases longer than five years, and when it exempted certain providers of electric vehicle (EV) charging services.

The BCUC determined, in a 2006 decision, that an exemption from regulation is warranted “when such exemption serves the objects and purposes of the [Utilities Commission Act] and it is in the public interest to do so.” This is sometimes referred to as the “exemption test.”

The Utilities Commission Act does not explain its “objects and purposes”; the BCUC must divine these for itself. In its recommendations to expand the exemptions for thermal energy systems, the BCUC stated that regulation is required “if natural monopoly characteristics are present”, or if there are other reasons to “protect the public interest, whether or not natural monopoly characteristics are present.”

When a public utility is granted an exemption, even of the entire Utilities Commission Act, it remains a public utility. The BCUC retains the right to rescind the exemption, for which it does not need the approval of the government. The BCUC might do this to address a complaint about service safety or reliability, for example.