BC Hydro has been ordered to repay a small coastal First Nation more than $700,000 after unfairly charging them an extra annual fee for electricity for nearly a decade.
The $85,000 yearly fee, embedded in a 2014 electricity service agreement between the utility company and the tiny Gitga’at First Nation of Hartley Bay, wasn’t approved and was ruled as “unjust, unreasonable and unduly discriminatory” by the province’s energy regulator this fall.
During the complaint process, it was revealed that four other remote Indigenous communities — the Kwadacha, Uchucklesaht, Tsay Keh Dene, and Dease River First Nations — were also charged various extra fees in addition to their electricity rates. No non-Indigenous remote communities getting similar services were charged additional fees.
The individual contracts with each nation were crafted after the province ordered BC Hydro to offer services to certain remote communities to meet their power needs. Under the Remote Community Energy (RCE) program starting in 2005, BC Hydro was expected to connect eligible communities to the grid, distance permitting. For those too far away, BC Hydro took over management of their diesel-powered electricity facilities.
After paying the extra fees when they signed up with BC Hydro a decade ago, the Gitga’at launched a formal complaint with the B.C. Utilities Commission (BCUC) in 2022.
They asserted the fee was “plainly a race-based charge, pertaining only to First Nations (and) devised without their involvement.”
The nation argued the extra fee violated the Utilities Commission Act because it wasn’t approved by the BCUC, which sets rates and conditions for electrical service.
The extra fees paid by the other First Nations were kept under wraps by BC Hydro, which asserted the joint agreements were confidential.
All five First Nations paying the extra charges shelled out much more towards the total electrical costs for their communities than other non-Indigenous communities and some other First Nations involved in the RCE program, the BCUC heard.
Two non-Indigenous communities, Toad River and Jade City, in the same rate class as the Gitga’at weren’t charged extra fees. Nor were some other First Nations communities.
The five First Nations charged the surplus fees, on average, forked over 42 per cent of their total electrical service costs, while revenue generated from rates paid by non-Indigenous customers in Toad River only covered 11 per cent.
“This raises significant questions of fairness as between Indigenous and non-Indigenous [off-grid] communities,” the BCUC panel decision stated.
“BC Hydro’s evidence also shows that in all cases, the [extra] payments are not reflective of BC Hydro’s actual cost of service for each community.”
BCUC agreed with the Gitga’at and decided BC Hydro violated the Utilities Commission Act by not getting the regulator’s approval for the extra charge.
BC Hydro also contravened the act because the discriminatory fees charged to the Gitga’at weren’t equally applied to all communities in the RCE program with the same rate class — even though all of them faced similar circumstances and conditions for service, the BCUC said
BC Hydro is also obligated to stick to approved charges outlined in the public rate schedule, the regulator said.
What’s more, even the disputed charges levied against the affected First Nations were “not applied consistently, and varied greatly,” the regulator said.
The BCUC also rejected BC Hydro’s arguments that the yearly fee paid by the Gitga’at wasn’t actually an electricity rate and that the agreement was a commercial contract, and neither needed regulator approval.
BC Hydro argued the disputed fees charged to the Indigenous communities were a “flow-through” of federal funds directed to First Nations for electricity costs as the result of a memorandum of understanding (MOU) between the utility and the provincial and federal governments in 2009.
However, none of the First Nations charged the disputed fees had any say in crafting the agreement by BC Hydro and the two levels of government, BCUC highlighted.
Remote First Nations that became BC Hydro customers under the RCE program before the non-binding MOU were not charged extra.
BC Hydro must refund all extra fees paid by the Gitga’at — plus interest — within six months of the Sept.18, 2023 ruling, BCUC ruled.
The Gitga’at First Nation is pleased with the decision and reasoning in the BCUC decision, said Teresa Robinson, GFN band manager, in a press statement.
The GFN took BC Hydro on as its energy provider, hoping the company would support the community’s decades-long goal to shift to clean energy and stop burning diesel for electricity, Robinson said.
The utility company continues to expect isolated, off-grid First Nations to develop and pay for clean energy projects to decarbonize their communities, she said.
The climate target to wean remote communities off diesel by 80 per cent by 2030 as part of the province’s CleanBC plan is still a long way off, Robinson added.
“There is much more work to be done to improve and develop respectful relationships and advance reconciliation with BC Hydro,” she said.
BC Hydro hasn’t appealed the BCUC decision, said spokesperson Kevin Aquino in an email to Canada’s National Observer on Wednesday.
“We intend to refund the full amounts collected from all the First Nations under their respective electricity servicing agreements (EAs), in accordance with the same terms as the repayment to Gitga’at,” the email said.
However, BC Hydro did not answer questions about how much it owes the First Nations communities or when it intends to pay them.
BC Hydro stopped collecting the disputed fees in November 2022 — six months after the Gitga’at launched the complaint — because of changes to federal funding models and to advance reconciliation with the impacted First Nations, the email added.
During the complaint process, BC Hydro also promised to end the disputed agreements (EAs) to respect the outcome of the complaint decision.
However, the utility also argued it shouldn’t have to refund any money the Gitga’at already paid.
In its decision, BCUC said it may review the contracts of impacted Indigenous communities to see if more actions should be taken.
“The BCUC continues to monitor BC Hydro’s compliance with the … decision and steps the utility is taking to appropriately address costs collected from the other four communities,” communications manager Krissy Van Loon said in an email Tuesday.
However, the regulator also didn’t clarify when or how much it expects BC Hydro to compensate the Indigenous communities.
Rochelle Baker / Local Journalism Initiative / Canada’s National Observer
Comments
The [BC] First Nations have received a total of $7.1 million to develop alternative-energy projects and improve energy efficiency through a wide range of initiatives in the first round of funding via the provincial Community Energy Diesel Reduction (CEDR) program, developed and operated in co-operation with the First Nations organizations New Relationship Trust and Coast Funds.
It's becoming increasingly clear that the BC government needs to reform BC Hydro, most especially on electricity generation from wind, solar, geothermal and possibly tidal.
Climate related glacial erosion is mushrooming as a huge future challenge. Hydrological studies conducted by universities has made some very troubling recent discoveries on the rate of ice loss so far, and their warnings about the long term consequences could be called dire.
BCH is nearly totally dependent on water stored in glacial ice. It's time to diversify, given the mounting evidence that ancient water locked up in ice is a finite resource.
It seems nonsensical -- even hostile -- that BCH would build walls around its legacy hydroelectricity to maintain a monopoly when it will eventually find itself looking for partners in alternative generation capacity. There are claims that Hydro is ready for the electrification of the domestic economy, but adequate evidence to back that claim has not been presented. Private run-of-river projects have not been a viable solution; their private contracts to use public streams to generate power have been egregiously generous and present difficult public-private relationships tainted with political favouritism and contractual obligations that constrain future finances.
BCH needs to take a break and reassess it's relationship with not just First Nations, but with thousands of residential and business ratepayers when it comes to solar power. Hydro is decreasing its net metering credit for residential solar by 60% this year. It refuses to offer some FNs adequate or reasonable per kWh purchase rates for solar and wind. Added together, residential and business-owned rooftops and FN land offers a massive spatial area perfectly suited for solar backed by wind in open rural locations. We're talking about tens of MW of generation capacity that BCH does not have to pay for.
Regarding residential solar, Hydro operates at a snail's pace to process and approve rooftop solar in cities, even when built in excess of Code and minimum specified technical requirements, and as of two weeks ago, will supply only 40% credit. Hydro cites transmission costs as an excuse to refuse, delay or pay less than half of what it used to on an application. This is not a viable rationale given BCH is not paying for the capital cost of generation, that net metering accommodates distributed power very well, and that upgrades to transmission capacity must be conducted at some time anyway, especially in older communities.
BC must displace its province-wide consumption of fossil fuels. Period. About 85% of the energy used in transportation comes from oil. It's similar for heating buildings
BCH will need to double or triple it's generation capacity and upgrade its transmission infrastructure concurrent with the slow diminishment of its glacier-fed legacy Hydro. How is that possible without hundreds of km2 in solar arrays, hundreds of wind turbines, several geothermal base load power plants and GWs of power storage?
One alternative would be for homes, businesses, First Nation communities and possibly entire neighborhoods and towns to go off grid while BCH withers, except where directed to send power to sunset LNG plants at outrageously low rates, subsidies that rob the future.
There is another direction that offers a workable solution where everybody in the province pulls together to fight climate change, breaks the deep dependency on fossil fuels and guarantees energy affordability for a long time.
This is another example of why agreements should not be confidential, but open to public scrutiny for fairness, and so that the people know what they are paying for.