Province seeks to exempt two BC Hydro projects from review

September 16, 2015 | Justine Hunter | The Globe and Mail 

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The provincial government is seeking to bypass a regulatory review to fast-track two major projects designed to supply the natural gas industry with clean energy for production.

The bid to exempt the transmission line projects from an independent evaluation comes on the heels of a commitment last spring from the B.C. Liberal government to restore the powers of BC Hydro’s watchdog, the B.C. Utilities Commission.

Critics say the projects should not proceed without independent scrutiny to determine if the plans are sound.

The Crown corporation says it needs to move quickly to respond to what it calls “some of the most dramatic, single industry load growth in a discrete area that it has experienced over the past 50 years.” That demand is fuelled by plans to electrify gas plants developing the Montney shale gas deposits in the Peace region in B.C.’s northeast.

Critics say the projects should not proceed without independent scrutiny to determine if the plans are sound.

“Both projects will see BC Hydro ratepayers subsidizing the oil and gas industry,” NDP energy critic Adrian Dix said. “It is unlikely these projects would make it through regulatory approval.”

The B.C. Utilities Commission (BCUC) is responsible for regulating natural gas and electricity utilities, but the provincial government has allowed BC Hydro to avoid regulatory reviews of a string of major projects by the BCUC, including the Site C megaproject, the Smart Meters program and the Northwest Transmission Line – projects collectively worth more than $10-billion.

Last February, Energy Minister Bill Bennett vowed he would restore the authority of the BCUC after a report he commissioned blasted his government for decades of cabinet interference that undermined the watchdog’s credibility. That report said the government should allow the regulator to review major projects even when the cabinet wants the final say.

“To be effective, the BCUC needs to have credibility, public confidence and independence within the exercise of its mandate as set by government,” Mr. Bennett’s blue-ribbon panel concluded.

This summer, however, the energy ministry launched a consultation with stakeholders about allowing the two power lines – the North Montney Power Supply and the Peace Region Electricity Supply – to go ahead without obtaining a “certificate of public convenience and necessity” from the BCUC.

The projects are intended to deliver Hydro power to industrial customers. Hydro warns that without approval, those customers would likely acquire their electricity needs by self-supplying with natural gas.

The Crown corporation says the BCUC review of the Peace Region project would lead to delays of a year or more. “An exemption would provide greater certainty around the timing of the project for our customers and allows us to work toward an earlier in-service date,” BC Hydro spokeswoman Simi Heer said in a statement.

A review by the BCUC will provide a full and transparent assessment by an expert tribunal in which members of the public as well as organizations such as ours and other intervenors experienced in utilities regulation can probe the need, cost, siting, alternative options and other relevant issues relating to the proposed projects

A group representing low and fixed income residential ratepayers is opposing the exemption application. “A review by the BCUC will provide a full and transparent assessment by an expert tribunal in which members of the public as well as organizations such as ours and other intervenors experienced in utilities regulation can probe the need, cost, siting, alternative options and other relevant issues relating to the proposed projects,” the BC Public Interest Advocacy Centre stated in a response to the consultation.

Sarah Khan, a lawyer for the organization, said hydro rates are going up at an unsustainable pace because of BC Hydro projects that have not been examined by the regulator.

“The cost of the projects exempted are so significant, and those costs are going to be borne by BC Hydro ratepayers,” she said in an interview. “We are concerned because the rate increases just keep going, and low-income ratepayers are having a great difficulty paying for their residential hydro bills.”