B.C. government urged to stop chaining its watchdog

Government meddling puts confidence in BCUC's independence at risk: auditor general

Auditor General Carol Bellringer points to government interference eroding confidence in utilities watchdog.

Public confidence in the BC Utilities Commission (BCUC) as a public watchdog could be eroded, if the provincial government does not stop meddling with its decisions and direction and excluding it from key major project reviews, a new report from B.C.’s auditor general suggests.

In a review of the BCUC, B.C. Auditor General points to several cases of interference by the B.C. government. It reads like a cautionary note to the new NDP government to not follow the example set by the previous Liberal government.

The BCUC is supposed to be an independent watchdog whose purpose is to protect ratepayers from government utility monopolies, while balancing the needs of Crown corporations like BC Hydro and ICBC to properly fund the services it provides – electricity, natural gas and auto insurance, for example.

But the previous Liberal government interfered with the commission’s work and also excluded it from reviewing three major energy projects or programs: Site C dam, the Northwest Transmission Line and BC Hydro’s smart meter program.

“By excluding the commission from key decisions, government loses out on the value of an independent, transparent review and expert advice,” said Auditor General Carol Bellringer.

The most glaring example of bypassing the BCUC was when the previous Liberal government approved the Site C dam – now estimated to come in $2 billion over its original projected budget – without sending the project to the BCUC for a review.

The BCUC was only asked to review the project after the new NDP government took power, but by then the project was already well advanced and cancelling it would have cost the government $4 billion in contract termination fees and site remediation, requiring a 12% hydro rate hike.

The previous government also meddled in more routine BCUC business. For example, in 2016 the commission asked ICBC for some hypothetical scenarios and asked how it might impact its premium rates. ICBC responded that it would need substantial rate increases.

The Liberal government responded by changing the commission’s mandate, launching a review of ICBC and then issuing directions to the commission that, among other things, included capping ICBC rates at 4.6%.

ICBC is now facing a $1 billion deficit, and it was recently revealed that some key recommendations for getting the Crown corporation’s books back in order were removed by the previous Liberal government from a report on ICBC.

As for energy issues, Bellringer said the provincial government has the right to set both energy policies and the BCUC’s mandate.

“But when government gives direction it should not dictate specific outcomes or intrude on the commission’s consideration of individual applications,” Bellringer said in a press briefing.

Although the more egregious examples of government interference came from the previous Liberal government, the new NDP government has also shown an inclination to interfere with the direction of Crown corporations.

For example, BC Hydro had originally asked the commission to approve a 3% rate increase for this year. But prior to the last provincial election, the NDP had promised to freeze rates for one year.

After the NDP formed government, BC Hydro suddenly changed course, and asked the BCUC for a rate freeze. The BCUC rejected that request and approved the 3% rate hike BC Hydro originally asked for. The NDP government did not try to overrule the BCUC’s decision.

Bellringer also cited one of the previous government’s own task forces that reviewed the BCUC and concluded in 2014 that objectives outlined in B.C.’s Clean Energy Act “are diverse and in many cases contradictory. This can make it difficult for the commission to balance different government objectives.”

Bellringer also cited a task force recommendation that BCUC staff and commissioners should be paid more so that it can attract and retain talent.

“The commission needs to compete with higher paying utilities for qualified talent,” Bellringer said.