What the BCUC Indigenous utility regulatory inquiry means

This is the sixth publication in Remote Communities Energy in Transition, a series about challenges, opportunities, and solutions in integrating renewable energy into remote communities’ microgrids. These publications cover the advancements in technical, financial, and human capacity, energy policy, and regulations needed to transition remote communities to clean energy. For more publications, visit our Renewables in Remote Communities website.

Of the 300-plus distinct First Nations reserves in British Columbia, 27 are remote communities. Of those, most rely heavily on diesel generators as their primary energy source — which is expensive, carbon intensive and fraught with severe health and environmental impacts. Rather than depending on shipments of diesel into their hard-to-reach communities, they could harness abundant local renewable energy resources such as sun, wind, water and biomass to create local energy solutions that contribute to economic independence while creating local jobs.

Unfortunately, achieving energy autonomy that would allow for this shift to clean energy is extremely difficult for First Nations because electricity generation and provisioning for all First Nations in B.C. is, for the most part, controlled by the public utility.

Defining and regulating Indigenous utility companies

While a few municipalities and a handful of Indigenous communities have their own Independent Power Authorities and run their own utilities, they are the exception to the rule. In an attempt to rectify that, and to possibly give First Nations more energy autonomy and economic opportunities, in March 2019 the B.C. government ordered the British Columbia Utilities Commission (BCUC) to inquire and make recommendations on if and how Indigenous utilities should be defined and regulated. The final report, released in April, states that it should be a First Nations right to operate their own energy utilities. This presents significant opportunities for First Nations’ economic development and job creation in their traditional territories, but only if the government follows through with meaningful adoption of the recommendations it put forward.

Currently, any sale of electricity other than from BC Hydro or FortisBC is not allowed under the B.C. Utility Commissioning Act. However, this was not always the case: Only a few short years ago, First Nations were successfully generating and selling power in B.C., but the cancellation of the Standard Offer Program (SOP) in 2019 resulted in the significant loss of economic benefits and opportunities for First Nations to develop and own community driven, clean energy projects. If implemented, recommendations from the BCUC inquiry could give some of that power back to Indigenous communities.

Additionally, in the fall of 2019 the Government of B.C. committed to further reconciliation goals with the adoption of Bill 41. Essentially, the bill aims to reduce disproportionate barriers and reconcile the historical and current impact colonialism has had on Indigenous Peoples, by aligning provincial laws with the principles of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). Linking the B.C.’s adoption of UNDRIP to the creation of economic opportunities for Indigenous communities through running their own energy utilities was a critical step for the government. B.C. is the first Canadian province or territory to take this important step, and we commend their leadership.

What are the final recommendations?

The BCUC’s final report contains 35 recommendations, and, comparing the interim report and the final report, seems to have considered much of the input sought from interveners, more than 50 First Nations groups, and interested parties (including a Letter of Comment from the Pembina Institute).

The recommendations generally fit into three categories: regulation, market access and safety. The BCUC proposes that an Indigenous utility be defined as a utility where an Indigenous nation has control over the decisions and operation of the utility and is independent of the type of service provided by the utility (electricity, heating, or other). Recommendations around regulation and safety are centred around opting out of BCUC regulation (and recommendations on setting up an Indigenous Utility Regulator), dispute resolution handling and handling of complaints, protecting ratepayers, and the enforcement of Mandatory Reliability Standards.

The most interesting category is that of market access. The BCUC recommends that the B.C. government remove restrictions that would prohibit Indigenous utilities from accessing the transmission system in the province – which is currently owned and controlled mostly by the public utility BC Hydro. This is encouraging. Opening access and transmission rights on public infrastructure would be a massive shift signalling support for Indigenous communities to participate more equally in the retail electricity market. The BCUC goes even further to recommend reinstating programs that allow wholesale energy sales where independent power producers (IPP) sell their electricity to BC Hydro in bulk, as did the SOP program. Interveners in the inquiry process indicated that if such a program is reintroduced, it must be designed to reflect principles of reconciliation and self-governance.

Where do we go from here?

The groundwork has been set and the recommendations to the Government of B.C. are clear. While we believe the recommendations are for the most part strong and seem to take into account the feedback from the registered intervenors and the public engagement sessions, the degree of change will depend on what recommendations (and how many) the B.C. government implements and how aggressively it will implement policy and regulatory changes. Weak or no implementation of the BCUC recommendations will further cement the government’s perpendicular efforts toward reconciliation with Indigenous Peoples.

There is a strong correlation between this work and the collaborative policy work Pembina is doing in the Indigenous Off Diesel Initiative (IODI). The IODI program offers unique funding, training and mentorship for 15 Indigenous champions to reduce diesel use in remote communities. The full implementation of BCUC recommendations, and most importantly the capacity building recommendations, would bolster the policy wins for the IODI program and allow those involved to learn about what B.C. is doing and push for similar policy frameworks in their jurisdictions.

Venturing into the business of setting up and operating utilities is no trivial matter and will require capacity support to many Indigenous communities. But done right, the business and economic opportunities to Indigenous communities to participate in the renewable energy market are plentiful and waiting. Building capacity for utility ownership in Indigenous communities will enable them, if they choose, to approach energy generation in their communities or traditional territories in alignment with their governance principles. Prioritizing First Nations’ ability to be energy utility generators, distributors, and customers is critical to their political and economic self-determination, and in turn to their right to freely pursue economic and social development.

We encourage the B.C. government to not default to picking one or two recommendations that are the easiest to implement, or that pose the least risk to incumbent utilities, but to be bold and provide a transparent roadmap for what they plan to act on. Their legislation of UNDRIP in 2019 and the government's stated commitment to reconciliation requires them to seriously consider all the recommendations provided by the BCUC. The results of the BCUC Indigenous utility regulatory inquiry is a policy and regulatory blueprint for the economic integration of First Nations in the province’s economy, and a step forward on the path to self-governance, self-determination, and reconciliation.

B.C. is in a position to be a leader in economic reconciliation and decolonizing clean energy policy. We will continue to support and advocate for the advancement of this new policy, driven by our relationship with Indigenous communities through our policy work and those that are ready to enter into the energy market.

Remote Communities Energy in Transition

Publications in this series:

How B.C. can be a leader in economic reconciliation

B.C.’s Indigenous utility regulatory inquiry – what does it all mean?

Dave Lovekin

Saeed Kaddoura