VICTORIA — The New Democrats have revoked the independent oversight of B.C. Hydro in the two years since Premier David Eby fired the chair of the B.C. Utilities Commission.
So says former BCUC commissioner Richard Mason, who quit the regulator in September 2023, right after Eby fired the longtime chair, David Morton.
Mason now maintains an online watchdog site, Just and Reasonable, a title that echoes one of the principles of regulatory oversight. He recently blasted the premier and the New Democrats in a posting marking the second anniversary of Eby’s hit job.
“In the two years since the government fired the BCUC chair, the agency has lost most of its powers to regulate B.C. Hydro,” wrote Mason. “The premier’s autocratic style has reduced transparency and independence and increased financial risk.”
The former commissioner says Eby’s action sent a chilling message to the BCUC.
“He signaled that the appointments of commissioners could be at risk if their decisions displease the government. The particular worry was that when B.C. Hydro asked for something, the commission would dutifully deliver it, regardless of the public interest.”
Which is pretty much what happened in the 12 months or so after the firing.
“By October 2024, B.C. Hydro asked for and was granted a reversal of four previous orders to Hydro, an unprecedented number. The most egregious reversal was to backtrack on a scheme to encourage Hydro to manage its cost increases,” says Morton.
“I find it very hard to believe that the commission would have reversed these four decisions if the previous chair hadn’t recently been fired. B.C. Hydro simply presented the BCUC with an opportunity to change its mind, after a very loud warning shot had been fired.”
The replacement chair, handpicked by Eby, was Mark Jaccard, a resource economist from Simon Fraser University who’d headed the commission under the NDP government of the 1990s.
This time Jaccard came to the commission from an Eby-appointed task force on B.C. Hydro.
One of its assignments was to “modernize the utilities commission to better align with government policies.”
NDP government policies, that is.
The New Democrats have also been weakening the commission’s powers as an independent regulatory authority, says Mason.
Premier John Horgan restored the commission’s independent regulation of electricity rates, having been sharply critical of B.C. Liberal government interference in rate-setting during his days in Opposition.
But in last month’s posting, Mason details how the Eby-led NDP government has retaken control of rates and pegged them at artificially low levels for political reasons.
The cabinet has also allowed Hydro to make renewed use of deferral accounts, which the B.C. Liberals widely abused to defer current costs and expenditures for repayment in future years.
Mason estimates that with Eby government approval, Hydro can bypass commission scrutiny and defer $1 billion worth of current expenditures over the next three years.
The New Democrats have also revived the Liberal practice of exempting pet projects from commission oversight. One recent cabinet order reversed a commission directive that required Hydro to disclose on utility bills how domestic rates are cross-subsidized by sales of electricity outside B.C.
“The commission has been stripped of so many powers to regulate B.C. Hydro that the independence of its chair and commissioners is no longer relevant,” says Mason.
“With the government telling the commission what Hydro’s rates and profits will be, what investments the utility will make, and what amounts to put into its regulatory deferral accounts, I don’t think we can say any longer that the BCUC is independently regulating B.C. Hydro.”
Cabinet decisions are made in secret, and the advice backstopping cabinet decisions is excluded from access to information, notes Mason.
“Since we don’t know what evidence they considered, or who they listened to, government is open to accusations of favouritism and political expediency. Decisions made for political expediency, rather than based on sound principles and economics, often don’t end well.”
By way of example, he notes the New Democrats have fixed Hydro rates until March 2027, a year before the next scheduled election.
“I strongly suspect that B.C. Hydro’s new government-set rates are too low,” says the ex-commissioner. “Why else would the government have intervened? If the rates the government chose were sufficient to cover Hydro’s costs, the commission would have cheerfully approved them.”
If the rates are too low to cover costs, Hydro could be in an untenable financial position with nowhere to turn, suggests Mason.
The Horgan government was able to pay down debt, shore up Crown corporation finances, and still balance the budget. The Eby government, with multi-billion-dollar deficits of its own, has no room to move.
However, I would note that the commission, exercising what remains of its independence, recently ordered Hydro to produce a post mortem on Site C.
Specifically, how “the lessons learned” on contract tendering, project management, risk assessment, geotechnical conditions, and cost control “will inform future capital projects.”
The report is due the day before Halloween. Could be a hair-raising read, because Hydro recently disclosed that it went a combined $3.2 billion over budget on the two main Site C contracts alone.
