BC’s Clean Energy Act: Balancing government control and independent regulation

By Mark Jaccard
Originally published in the Vancouver Sun June 4, 2010

BC’s proposed clean energy act has triggered extreme statements pro and con. “Great, because our elected representatives are taking responsibility for electricity policy.” “Disastrous, because it reduces utilities commission control over BC Hydro.”

While the new act covers many issues, the key controversy is its proposed replacement of the utilities commission with the provincial cabinet for approving major BC Hydro projects and programs. These include turbines at existing dams, electricity from independent power producers, mass replacement of home meters, extensions of the transmission grid and, most importantly, the Site C dam on the Peace River. With the Site C dam as the heavyweight, the cabinet-approved bill to BC Hydro customers approaches $10 billion.

Supporting the act is the argument that our elected representatives should make these big financial commitments, not the unelected technocrats at the utilities commission. If BC is to meet its energy security and environmental challenges, it needs policy consistency throughout government. The counter argument is that only the utilities commission has the expertise, the opportunities for public input, and the distance from short-term political pressures to make sound decisions having such long-term implications.

Today, the governing Liberals argue in favour of cabinet control while the opposition NDP argue in favour of the commission. But both parties have been on both sides of this issue over the past two decades.

Indeed, both perspectives competed within the NDP government of the 1990s. Premier Mike Harcourt and his energy minister, Ann Edwards, believed the utilities commission offered the best means of providing a check on BC Hydro. They appointed me in 1992 to chair the commission, which I did for five years, introducing intervener funding, an integrated resource planning process with obligatory public involvement, and a negotiated settlement process involving key interests including environmentalists and consumer groups. These reforms are still integral to the commission’s operation, whether applied to Hydro or other utilities.

Within the NDP government, however, Glen Clark questioned why unelected commissioners, who never face the electorate to defend their decisions, should determine major investments by BC’s largest crown corporation. When Clark became premier in 1996, he effectively removed Hydro from commission oversight and the corporation ceased its open planning process. To everyone’s surprise it unveiled a new strategy to build a natural gas pipeline to Vancouver Island and several natural gas-fired plants, which would dramatically increase greenhouse gas emissions. Political control over Hydro had clearly become paramount.

When Gordon Campbell campaigned for premier, he promised to re-instate commission control over Hydro, which he did in 2003. Subsequent open reviews and commission decisions finally convinced Hydro to abandon natural gas and return to its earlier pursuit of renewable electricity for Vancouver Island and the rest of the province. This approach meshed with Campbell’s climate policy initiatives of 2007, which included a requirement that Hydro acquire zero-emission sources of electricity, be these from independent power producers or a future BC Hydro project like the Site C dam.

Recent frustrations, however, have convinced Campbell to once again liberate Hydro from commission control, at least for the projects and programs listed in his new act. The commission’s processes are slow and its decisions can act against government policy goals, an example being its decision (since overruled) that Hydro should continue using its greenhouse gas-emitting Burrard Thermal plant.

Thus, Campbell and the NDP have now been on both sides of this debate. So which approach is better?

There is no easy answer and, indeed, one should mistrust anyone who argues vociferously for either extreme. It is important that the commission, which is after all unelected, not thwart legitimate government policy objectives. At the same time, the commission has demonstrated through the years the value of an arms-length agency that provides a check on major electricity investment decisions, restricting the influence of short-term political considerations. In fact, I have been invited over the years to explain the commission’s regulation of Hydro to other jurisdictions that ended up emulating the BC model, including Hungary (1993), Brazil (1997) and Quebec (1999).

In the case of Site C, the decision is too monumental, in my view, to be delegated to unelected officials. That decision must be made by cabinet. But I am not convinced, however, that these other projects and programs should be exempt from commission oversight. I think government can achieve its policy objectives with language it has in the new act directing the commission to be “guided by” government climate and energy security policies. And it can require the commission to accelerate its procedures. When I chaired the commission, for example, we limited every hearing to two weeks and allowed ourselves only one month to issue a decision.

While quick actions are needed to transition BC toward a cleaner, more electricity-intensive economy, we must be careful not to jettison oversight mechanisms that have served us quite well.