The Minister of Energy promised BC Hydro’s new clean energy projects would have BCUC oversight. A decades-old ministerial exemption order makes that a hollow promise.
Introduction
I’m sure readers of Just and Reasonable are well aware of BC Hydro’s impending energy deficit. As early as 2029 BC Hydro will need more electricity than it can generate itself, and it has no plans to build a major new source of generation of its own.
As a result, BC Hydro issued the 2024 Call for Power, seeking to procure clean or renewable electricity from newly built private sector facilities in BC.
On December 9, 2024, the government announced that BC Hydro had selected nine wind projects with a total of nearly 5,000 GWh of energy per year; a tenth project using solar was announced December 20.
The government had previously promised that, unlike some earlier procurements by BC Hydro, the BC Utilities Commission (BCUC) would have “oversight” of these projects. On May 7, 2024, the Minister of Energy said in the legislature:
“To be clear again, the standing offer program, the projects out of that did not have B.C. Utilities Commission oversight. The call for power projects will have that oversight to determine that things are being done in the best interests of the developers and B.C. Hydro and, ultimately, the ratepayers as well.” (my emphasis)
In criticizing the previous government’s record and promising BCUC oversight for these projects, the Minister appeared to be taking the moral high ground.
What is a BCUC project review?
When the Minister said that the projects would have BCUC oversight, I think it’s reasonable to assume she meant the requirement for a Certificate of Public Convenience and Necessity (CPCN).
Any person building new facilities to generate or transmit electricity in BC requires a CPCN from the BCUC before they start construction. Reviewing proposed projects is a fundamental power delegated to the BCUC in the Utilities Commission Act, and the BCUC can issue a “cease work” order if construction starts without authority.
The CPCN will only be issued if the BCUC determines that a project is in the public interest, using a well-established set of guidelines. The BCUC looks at the need for the project, the cost, specifics such as proposed technologies and location, and whether there has been sufficient consultation with the public and with First Nations.
But the BCUC has confirmed that no successful bidder from the Call for Power has applied for a CPCN to build a new facility.
Ministerial exemption
Both the BCUC and BC Hydro have helpfully referred me to a 2002 ministerial order that says companies selling electricity only to BC Hydro are exempt from almost all of the Utilities Commission Act, including the need for CPCNs.
It appears, then, that these new energy projects don’t actually need BCUC approval, although neither BC Hydro nor the government appear to have mentioned this during the Call for Power process, or in last year’s legislative debate.
As an aside, this is another example of a special privilege the government extends to BC Hydro, the provincially owned utility. Electricity suppliers serving private sector utilities must apply to the BCUC for a CPCN before they can build any new facilities.
BC Hydro’s recent filing
While it seems there will be no BCUC review of the new projects, BC Hydro has applied for approval of the ten contracts it has signed with the successful bidders to buy their electricity, which is required by section 71 of the Utilities Commission Act.
BC Hydro suggested that the process to approve the contracts could be approved without a hearing. To its credit the BCUC decided to hold a hearing, although in keeping with its current “efficiency” drive, it didn’t allow any parties to intervene, merely to submit letters of comment. Still, at least there is some public process to examine the contracts.
This examination will be limited, however. A section 71 review is focused on the need for the energy and the price and terms under which it will be purchased. There is no expectation in the Utilities Commission Act, nor in the BCUC’s past practice, that it would review an unbuilt facility to determine whether that facility is in the public interest as part of a section 71 review.
And in any case, thanks to the ministerial order, the government has already deemed that the projects are in the public interest. The BCUC would probably be exceeding its powers if it tried to circumvent these exemptions by examining the facilities; it can only look at the much narrower topic of BC Hydro’s contracts to buy the electricity.
Where do we go from here?
It would be interesting to know what the Minister meant last year when she promised that the BCUC would have “oversight” of the projects. Did she know the projects were exempt from the need for BCUC approval? If so, her promise at best rings hollow, at worse could be construed as a tad misleading. It’s also a bit rich to criticize the lack of BCUC oversight under the previous administration, and then use their ministerial order to sidestep a BCUC review on her watch.
The right thing to do would be for the new Minister of Energy to direct the BCUC to review the projects, and issue CPCNs for them if they are in the public interest, notwithstanding the ministerial exemptions. That would satisfy his predecessor’s promise in the legislature, and ensure that the public can see that these projects are the right thing to do.
This won’t happen, of course. The delay would mean BC Hydro wouldn’t get its new energy by 2029, and it would continue to be reliant on imported energy as it is at present.
For the sake of the BCUC’s reputation, it should make clear that it is only reviewing BC Hydro’s contracts, not the facilities that will generate the electricity. That way, the public can understand the BCUC’s limited role, and it was the government that decided the projects should go ahead.
BC Hydro may yet have problems even with the limited scope of the BCUC’s current review. There are now questions about whether BC Hydro engaged sufficiently with First Nations; if this ends up in court, it could cause a much more serious delay than any BCUC review of the projects. But that’s a topic for another day.
It’s hard to rush energy projects in BC!