Proceedings in the
Douglas Fir Room

The House in Committee, Section A.

The committee met at 1:16 p.m.

[Darlene Rotchford in the chair.]

Committee of the Whole

Bill 31 — Energy Statutes
Amendment Act, 2025

The Chair: Good afternoon, Members. I call Committee of the Whole on Bill 31 to order.

I will look to the minister for any remarks he wishes to make before getting started.

Hon. Adrian Dix: No. Over to them.

On clause 1.

Larry Neufeld: Before I do start, I just would like to make a little statement, again, of respect for the minister and his staff as far as being forthcoming and being willing to share and brief. I do appreciate that.

I did spend a fair amount of time on the bill itself, and at first glance, as I mentioned in the House, it appeared to me to be something that, with some amendments, I could support. As I thought about it further and as I dug into it further…. The minister and I have already discussed some of the fundamental disagreements that we might have — and I’ll be quite frank — over the need for this line.

Part of the line of questioning is going to be to establish the rationale behind it and, also, to provide some information that we can spend some time looking at as far as estimates are concerned.

My first question. In its integrated resource plan application to the B.C. Utilities Commission, B.C. Hydro has forecast an energy deficit position by fiscal 2029 and, more seriously, a capacity gap by 2032. Is the minister able to confirm that if shared ownership agreements, as per clause 1, of a transmission line anticipated to be completed no earlier than 2037…? How will clauses be incorporated in the agreements to mitigate these concerns?

Was that too convoluted?

Hon. Adrian Dix: I’m not sure. I think the last part was to connect the first question, which was — the member is quite right — an estimates question, to section 1 of the bill. I admire that effort, and what I would say to the member is I’m not going to be too restrictive about that.

But section 1 is quite specific to the issue of co-ownership with First Nations, which is an essential element of the North Coast transmission line project.

[1:20 p.m.]

I’d like for members of the committee to know I’m here with Peter Pokorny, who’s the Deputy Minister of Energy and Climate Solutions; Chris Gilmore, who’s the assistant deputy minister, electricity and utilities regulation; Keith Anderson, the senior vice-president of B.C. Hydro, and Zack Merilovich, the director of electricity policy. They’ll be joining and assisting me with the discussion today.

Phase 1 of the project is expected to be ready, if that’s the question, by 2030; phase 2 by 2032. The project will have shovels in the ground next year.

With respect to energy demand questions, which I think was his question, I don’t think it’s really linked to section 1. I’ll just say he’ll know, because he’s been briefed on this, I think, in some detail, that overall, energy demand, especially industrial demand, has been flat for some time in British Columbia.

There is, of course, more information coming as we file our integrated resources plan, as B.C. Hydro does with the B.C. Utilities Commission. But I think it’s fair to say that all of the estimates show demand for power increasing in British Columbia, and to a degree, this bill is a reflection of that.

The member will also know that late last year we announced the results of a call for power. The B.C. Utilities Commission, which reviews that call for power in its role, has or is reviewing electricity purchase agreements that have been made between successful call for power proponents and B.C. Hydro. And we’ve now engaged, as of May, in a second call for power. The first call for power, cumulatively, is power the equivalent of Site C, about 500,000 homes, an 8 percent increase in the power available by B.C. Hydro. The second call for power is expected to be the same.

The member asked about capacity. He’ll know, because I believe he’s been briefed on this….

[The bells were rung.]

We’ll take a break and have a vote and come back. I’ll leave you on the edge of your seat.

The Chair: Thank you, Minister.

We will recess until after the division.

The committee recessed from 1:22 p.m. to 1:39 p.m.

[Darlene Rotchford in the chair.]

The Chair: Okay, I’d like to call the committee back to order on Bill 18. We had left off with the minister, so I will let the minister finish his remarks.

Hon. Adrian Dix: I think when we went to the other House for the vote, I was talking about the RFEOI process, which the member has been, of course, briefed on.

It was launched on June 4. The responses were received September 8, 2025. We received over 100 submissions from 73 respondents, representing nearly 19 gigawatts of potential capacity. I think he asked about capacity.

[1:40 p.m.]

Now, I would say that we’re on section 1 of the bill and just leave a sense, perhaps, of the frame. We have section 1 of the bill for the House. The section is intended and does add new definitions pertaining to the North Coast transmission line ownership agreements for the Hydro and Power Authority Act.

The purpose of the section is to establish the authority of the Lieutenant Governor in Council to designate agreements between B.C. Hydro and First Nations for the shared ownership as part of the NCTL infrastructure and to allow B.C. Hydro to maintain all its current rights, powers and immunities under the Hydro and Power Authority Act, as well as its responsibilities when acting within the terms of the designated agreements. That’s the intent of it.

Its significance, of course, is very important. The NCTL is a partnership and will be a partnership between First Nations on the route and B.C. Hydro — which is, I think, a hugely advantageous consideration for the region, for the First Nations, for B.C. Hydro, for the project and for the speed with which the project will take place, which we see as important.

We’ll be having that discussion because that’s what the section is about. It’s about enabling that project, NCTL, to go forward.

Larry Neufeld: I absolutely understand. With respect to why these questions are coming through clause 1, it’s not clear to me what’s involved in those agreements or what could potentially be involved in the agreements. That’s what I’m trying to flesh out here.

I would suggest that I’m also curious, through my analysis, over the potential for the shared ownership agreements. In the same integrated resource plan that I referenced earlier, there is a figure, labelled 4-5, and it indicates an excess of generating capacity in the northwest. I have read an analysis by an independent party that would suggest that it’s an excess amount of generating capacity.

Even given the forecast that Hydro itself used in that figure, my question would be: for the parties that are going to be signatories under clause 1, will they be aware of that potential disparity?

Then secondly.... Actually, I’ll leave it there, and then I’ll ask the next part, so that I don’t convolute it.

Hon. Adrian Dix: Well, I appreciate the member’s suggestion. What he’s talking about refers to some independent estimate, which he didn’t identify. Perhaps if the member could just identify that, it would be of assistance.

Larry Neufeld: Thank you, Minister. Sorry, it was referring to the B.C. Hydro integrated resource plan application to the B.C. Utilities Commission. Then it was referencing the 2023 data. Within that document, within that application, I was referencing figure 4-5.

I’ve looked at it, and I’ve looked at it, and I’ve had an individual that’s very knowledgeable in the area review it with me to make sure I was understanding it correctly. What it is suggesting is that there is an excess amount of generating capacity in the northwest.

Perhaps my concern is that for First Nations partnerships that would be signing on under clause 1, would they be aware of that? Would they be in agreement with the need for the line, given that there currently is an excess amount of generating capacity?

Hon. Adrian Dix: I would just say to the member that, in 2023, B.C. Hydro undertook an analysis and sought responses to the need for electricity in the region. It has all been part of the previous briefing; it’s directly relevant to this.

The member will know that that was significant in mining — not just in mining but in the Port of Prince Rupert, in LNG, in other developments in the northwest — and that we would need more electricity in the northwest. Once that survey was completed, and the conclusion was that we needed more transmission to the northwest, the government proceeded with NCTL.

[1:45 p.m.]

At that time, it also engaged with First Nations; that engagement started in 2023, as I noted in the House. As the member will know from our briefings on this subject, they’ve been in place, and terms sheets have been offered since then. Obviously, First Nations are well aware, because they live in the northwest, of the enormous economic possibility.

If we like, we can go down the list of mining opportunities that are going forward and could go forward based on the assurance that electricity will be coming. That’s why we’re building the North Coast transmission line. It is a generational opportunity for the northwest.

So in 2023 that review was taken. The results of it have been well known for some time. They were the subject of our estimates debate in the spring, and the decision to proceed, I think, for the government, in any event, was an obvious one. Huge generational opportunity to create wealth in the northwest, jobs for people in the northwest, jobs for First Nations in the northwest, and an opportunity that we strongly believe First Nations should share in through a partnership agreement.

We’ve been working with them and will continue to work with them in phase 1 and phase 2 for partnership agreements. Those are obviously the first that we do, because those are the first parts of the line that would be built, and subsequently the third phase of the line in order to ensure that First Nations were part of those transmission opportunities. We are confident.

If you were to wait for final investment decisions from mine to proceed, then we would be delaying those projects, just as you would if you proceeded, say, with the opposition’s position on small nuclear reactors. You’d be waiting decades, and capital would leave. So our understanding…. Our work has demonstrated the need for more clean electricity in the northwest. That’s why we’re proceeding with the line.

Certainly, First Nations are not just in agreement with that, but well aware of it.

Larry Neufeld: Thank you for the answer, Minister.

Following up on the last answer, will there be…? Again, with respect to clause 1, the ownership agreements, we haven’t established what those are going to look like with respect to the transmission line. But the minister references a number of mines and opportunities that would proceed.

Will there be any ownership agreement or encouragement for those entities to engage in an ownership agreement with a similar ownership agreement as would be represented in clause 1?

Hon. Adrian Dix: Well, the member will be aware of all the work that’s going on with the Tāłtān Nation around mining in the northwest, which is a generational inspiring opportunity. If he knows, and I know he does, because he visited the northwest this summer…. He’ll know of the real sense of engagement by First Nations in the region to advance their wealth and their economic circumstances to create jobs, to become part of it.

If the question is, are those who will receive the electricity involved with First Nations, you bet they are. But involved with First Nations…. Ksi Lisims is a project initiated by the Nisga'a First Nation. For example, the mining issues are worked out with the Tāłtān and others, depending on where…. FPX is slightly differently placed than, say, Galore Creek or whatever in terms of the mining.

You bet those projects will be engaged with First Nations, as was LNG Canada, as obviously Cedar LNG, which is another project in the northwest. It is an extraordinary project, one that will be effectively the lowest-emission LNG in the world until Ksi Lisims comes in line. It might be slightly behind Ksi Lisims in that category.

So not only are First Nations involved in discussions around mining, discussions around the Port of Prince Rupert, discussions around other economic issues. But they’re, in fact, leading those, as the member knows. So it wouldn’t be correct to say that other projects are asking First Nations to be involved, when they’re being led by First Nations in those cases. But I think it’s fair to say that in the region, there is enormous interest in economic activity and the creation of support and wealth and community and jobs by First Nations. They’ve been leaders in this regard.

[1:50 p.m.]

They’ve been fully engaged and involved as they were with CGL, as the member will remember, and involved in his own region in a different way through Treaty 8 and all the discussions about revenue-sharing and restoration of work done in his region, which is something that is, again, beyond the scope of the bill but is inspiring, I think, to everybody involved in it.

Larry Neufeld: Thank you to the minister for the detailed answer.

What I was getting at was more along the lines of: as we move toward the allocation component of this bill, or the potential allocation component, is there going to be preference given to organizations or groups that have signed an ownership agreement similar to what’s represented by clause 1?

Hon. Adrian Dix: Well, we’ll get to the allocation framework when we get to section 2, if that’s okay. I would say in a general sense that you saw in our call for power, again, something that was dealt with in our legislation this spring, that we had some occasion to discuss in that case. For B.C. Hydro, part of the criteria for the call for power was a minimum of 25 percent participation by First Nations in that call for power. In fact, that was exceeded in every case of an awarded contract. So that was part of the conditions.

But this is not really an allocation framework. What this allows is for B.C. Hydro to become involved in a partnership with First Nations, a joint venture with First Nations that B.C. Hydro continues to be responsible for. I’m sure the member will be asking me about the details of that and responsibility for the system and everything, or his colleague will be.

That’s what this section deals with. It allows B.C. Hydro to do what, for example, the wind companies would have done in that case, which is to have as a joint venture partner a First Nation.

Larry Neufeld: Thank you to the minister.

I think I’ll move slightly into a different area. Can the minister specify or list which First Nations have been formally consulted and whether these agreements will be tabled for public review?

Hon. Adrian Dix: So it’s not just an issue of consultation, as the member will know. It’s an issue of negotiation and discussion of a partnership.

In terms of phase 1 nations, which is the phase from Prince George roughly to Fraser Lake, just to put that index where that is: the Lheidli T'enneh, the Syilx, the Nazko, the Nadleh Whut'en.

In phase 2: the Witset First Nation; the Ts'il Kaz Koh First Nation; the Nee Tahi Buhn Indian Band; the Skin Tyee First Nation; the Wet’suwet’en House groups, of which the member will know there are several; the Kitselas First Nation; the Kitsumkalum First Nation; the Metlakatla First Nation; and the Lax Kw’alaams First Nation. So that’s in phases 1 and 2.

There will be, of course, as we go into phase 3…. Those negotiations are obviously not underway yet. We’re obviously working through it where we’re starting construction first, but in the first phase of the line, those are the First Nations that are involved.

The process is a subject of negotiation and, when final agreements are announced, we’ll be announcing those publicly.

Larry Neufeld: Thank you to the minister.

So if I heard correctly…. I’ll actually just ask this as a question as opposed to indicating what I believe that I heard.

Have all First Nations whose territories are being crossed been contacted? Have any of them refused to engage in negotiations?

Hon. Adrian Dix: Yes.

Larry Neufeld: Thank you for the very succinct answer, Minister.

Interjection.

Larry Neufeld: Excellent, excellent.

[1:55 p.m.]

With respect to the agreements, I was looking for a definitive answer in your previous, less succinct, answer. Perhaps I’ll reiterate. Will those agreements be tabled publicly?

Hon. Adrian Dix: There will be commercially sensitive information, and that wouldn’t be made public. But substantially, this is a public project of significant note. Aside from anything commercially sensitive, once agreements are made, they’ll be made public, and they’ll be duly celebrated.

Larry Neufeld: Just to be crystal clear, we’re saying that a redacted version of each and every agreement with First Nations will be provided publicly.

Hon. Adrian Dix: Well, the substance of the agreements will be made public because it’s a public process. It’ll be made public not least of which by the First Nations themselves, who will be seeking support and endorsement through their governance structure for the agreements. So the substantial information about the agreement will be made public even if commercially sensitive parts of the agreement aren’t made public.

Larry Neufeld: With respect to the agreements that are subject of clause 1, would the minister be able to give us an understanding of what…. Well, my first question would be an understanding of what type of level of ownership or what range of ownership that these agreements would encompass.

Hon. Adrian Dix: Just in a general sense, just to describe what the agreements are…. This may be a less succinct answer just to start us off here. These agreements will include the roles and responsibilities of both B.C. Hydro and the First Nations partners, including the operational nature of B.C. Hydro’s role in the construction and operation of the line, and the terms of B.C. Hydro leasing the line from the limited partnership — the limited partnership being up to 50 percent owned by First Nations, which will need to be decided, and 50 percent owned by B.C. Hydro.

Agreements can only be, for phases 1, 2 and 3, between First Nations and B.C. Hydro for co-ownership of the line. Those are the nations. Agreements can only be about construction, operation, control, use, management, maintenance, safeguarding, repair or upgrade of the North Coast transmission line.

Larry Neufeld: I didn’t hear potential co-ownership of existing infrastructure. Would that be included in any type of agreement that would be relevant to clause 1?

Hon. Adrian Dix: No.

Larry Neufeld: Okay. I think that that did answer that.

I’m going to move into a slightly different direction at this point. Will the agreements that will be signed under clause 1 assist in any way in opening retail access to industrial customers?

Hon. Adrian Dix: No, it doesn’t allow retail access, and that’s a specific term. I’d say that the purpose of the agreements is to build the line. That will allow for connection by industrial customers, whether it be at a distance connection to the main line or, if they’re closer, closer to that. That’s allowed, but this is not retail access.

Larry Neufeld: To clarify, there will be no negotiated agreements within anything applicable to clause 1 that would allow a carve-out for one of the nations to implement a retail power sale. That would be my question.

Hon. Adrian Dix: No, that’s not the intention.

Larry Neufeld: Is there any language that would be included in those agreements that would prohibit such actions?

[2:00 p.m.]

Hon. Adrian Dix: I laid out what the agreements do include in my previous answers. So the answer to that is no, they don’t include that discussion.

Larry Neufeld: Would there be anything in the agreements that would prohibit infrastructure from being, in the future, disposed of by one or more of the partners of what’s being covered by clause 1 without either…? I’ll leave it at that.

Would there be anything in the clause or in the agreements that are covered under this clause that would prohibit one of the partners to dispose of any asset that is related to the agreements that would be signed under clause 1?

Hon. Adrian Dix: I think the only thing that would be allowed is that nations would be able to sell their interests to other nations along the line, if you follow me, or to B.C. Hydro. But other than that, no.

Larry Neufeld: The language to safeguard B.C. Hydro ratepayers — would that be included? To substantiate the minister’s last comment, would that language be included in the agreements that are under clause 1?

Hon. Adrian Dix: I’d just note that the agreements, of course, are still under negotiation. But other than what I said, which is that people won’t be able to sell, except to other First Nations, part of the agreement, or to B.C. Hydro, which is a significant limitation…. That would be the only provision by which someone could sell that asset.

Larry Neufeld: Perhaps I’ll clarify. I wasn’t actually referring to the asset in that question. I was referring to power itself. So would there be an opportunity for a nation to engage in retail sale of power, or is there language specifically prohibiting that in the agreements under clause 1?

Hon. Adrian Dix: No.

Larry Neufeld: Well, you’re so succinct. I’m just going to keep my jacket tied up.

Interjection.

Larry Neufeld: Would any agreement signed as part of clause 1 or under the umbrella of clause 1 represent any commercial customers that would be asking for 150 megawatts or more?

Hon. Adrian Dix: The new line is to serve all customers, including those with 150 megawatts or more.

Larry Neufeld: That being the case, is it then the responsibility of the customer to be an investor in upgrades to meet transmission and generation demand? If so, do we have, to this point, private investment secured? And if that is the case, would we be able to have that number?

Hon. Adrian Dix: The industrial customers won’t own the line. They may have to make interconnection. For example, the project…. Even at Bob Quinn Lake, there are some projects that are significant projects. They have to make their final investment decisions, of course. But there is significant interest, as indicated in 2023 and, subsequent to that, from customers who are in the queue. Obviously, their presence in the queue and listing the queue is something that’s commercially confidential to them until, obviously, they are lined up and they make their own decisions in that respect.

[2:05 p.m.]

So an industrial customer that needed to connect to the North Coast transmission line would be responsible for that, of course, but it doesn’t require ownership in the line to do that. They’re a customer, and they would be a customer of B.C. Hydro, just like the member and myself.

Larry Neufeld: Thank you for that answer. Again, to make it absolutely crystal clear, under the agreements of clause 1, there can only be two owners or two groups of owners — those being B.C. Hydro and prescribed First Nations?

Hon. Adrian Dix: Yes.

Larry Neufeld: Thank you for that. I believe we did cover allocation. I do agree that the next section is probably a better place to cover that. Will there be...? Well, that’s an allocation question as well.

Through agreements that would be signed under clause 1, would there be any rationale or explanation as to why the Utilities Commission is not involved in those agreements or is not being consulted on them?

Hon. Adrian Dix: In this case — I think the member would agree with this — there’s a demonstrated need. We can go through that very significant need if the member wishes. We’ve demonstrated need. Therefore I think the member is asking about the certificate of public convenience, but I’m not sure. He may want to clarify that beyond that.

Other than that, we’ve demonstrated need in our proceeding. The activities of B.C. Hydro, including things such as the integrated resources plan, are subject to review by BCUC all the time. BCUC has a responsibility to B.C. Hydro customers, whether they be industrial, commercial or residential.

In terms of this project, there was demonstrated need in 2023, and we’re proceeding with the project in partnership with First Nations, which is the subject of the amendments to the Hydro and Power Authority Act in section 1.

Larry Neufeld: Thank you to the minister. Again, a point of clarity on my part — I apologize if I didn’t understand this correctly: did the minister state that there was no need to subject this project to BCUC because the need was demonstrated in 2023? Did I hear that correctly?

Hon. Adrian Dix: The only way you do that is through CPCN, which is an issue of need for the project. The government and B.C. Hydro have already established the need for the project. That’s why, separate from the legislation, there’s an exemption from the CPCN, which the member has been briefed on and knows about.

In a general sense, BCUC has oversight of B.C. Hydro but doesn’t make investment decisions of this sort. They review B.C. Hydro’s plans and their rate applications and other issues, but they wouldn’t be dealing with this normally, except in the case of projects over $250 million, for CPCN.

In this case, the need for the projects been established separately, and the government is proceeding in partnership with First Nations, which is the subject of section 1 of this bill.

Larry Neufeld: I had a follow-up to that, and I’ll come back to it when it comes back up here.

Under clause 1, will the calculation of the offset and the terms of financial security be the same, relative to agreements signed under clause 1, as for all other industrial customers?

[2:10 p.m.]

Hon. Adrian Dix: Just to be clear, section 1 deals with the agreement between First Nations who own the transmission line and B.C. Hydro to build the NCTL. It’s not an agreement with industrial customers. I appreciate that these things are not necessarily self-evident. So I’m not being critical of the question. But that’s the case here.

Larry Neufeld: I will state on the record that the minister was correct, and that should have been on a different section. My apologies.

My next question is: can the minister provide a list of any agreements or memoranda of understanding that have already been negotiated, as part of this agreement process, under clause 1?

Hon. Adrian Dix: Term sheets have been negotiated with some phase 2 nations. The rest of the agreements are under discussion, but we are optimistic, both on phase 1 and on all the phase 2 nations, that we will come to agreement. That’s for the negotiation process.

Larry Neufeld: Thank you for that answer, Minister.

I believe that this already was answered but I would like to ask it in a very clear, concise way because this is something that stakeholders have questioned me on. Can the minister guarantee unequivocally that public ownership of B.C. Hydro’s core transmission assets will be maintained in full under this bill and any agreement signed thereunder?

Hon. Adrian Dix: Well, just to be clear on this point.... The member and some of his colleagues raised it at the second reading debate. What section 1 does and what the bill does, effectively, is enable co-ownership with First Nations.

This is not privatization. I understand the rhetorical debate, but it’s not privatization. B.C. Hydro remains the operator of the North Coast transmission line and the rest of the B.C. Hydro grid. For it to be otherwise would not make sense, given the integrated nature of the grid.

Co-ownership with First Nations is about equity and participation, not about transferring control. The bill enables designated agreements where First Nations can hold ownership interests, but B.C. Hydro retains its authority to operate, maintain and manage the line.

This is about ensuring support for the development of the line with added benefits, such as speeding up consultation times on permitting and regulatory work, which can translate into project cost savings.

It’s something that not just B.C. Hydro does, as a commercial Crown, but that virtually every oil and gas company operating in the member’s riding does. He’s well aware of that. First Nations will be able to earn returns on their equity investment over the life of the project. This is a stable, long-term economic benefit, not just to First Nations but, I’d argue, to the entire region.

That’s what it does, and that’s the role of B.C. Hydro and the role of the partnership agreement in the construction of the North Coast transmission line.

Larry Neufeld: Thank you for that answer, Minister.

Just so that I’m very, very clear, what I believe I heard was that under no circumstances would any agreement under clause 1, signed under the auspices of clause 1, affect anything other than the ownership of that transmission line.

Hon. Adrian Dix: That’s right. That’s three words.

Larry Neufeld: Again, I should have left it done up.

I’m going to get back into a little bit more technical stuff. As I was going through, reading and understanding how these agreements might affect different components of pricing, ownership, etc., I did some research on long-run marginal cost.

[2:15 p.m.]

I should have given a previous reference to this, but I’m referring here to the B.C. Hydro ’24-25 annual report, specifically figure 6-4. My question is: have participants in the agreements who are affected by clause 1 been made aware of significant scaling differences indicated in the reference figure comparing, in part, onshore wind and natural gas generation? Have they had any comment on those differences?

Hon. Adrian Dix: This is a transmission project, not a generation project.

You’re talking about, I would say quite reasonably — I look at Mr. Anderson — thousands of hours of work together on the details of this project by First Nations that are thoughtful and sophisticated in this area and have done an outstanding job representing their interests. Details, including very significant details about the line itself, where it’s located, are dealt with, but this is a transmission project, not a generation project. So no.

First Nations are well aware, the member will know, and very much involved in some of those areas, but this is about a needed transmission project which — like other transmission projects in recent B.C. Hydro history that have served other regions, principally Metro Vancouver — is needed in this region because of the demand for power for the economic and social aspirations of the region.

Larry Neufeld: The minister did mention, and I am aware, that B.C. Hydro will retain operating rights or operating ability for the transmission line. Would anything that would be signed under the representation of clause 1, as these nations would be equity partners in the line…?

B.C. Hydro’s annual reports do provide the cost of energy as not fully allocated. Would that financial information be provided to the equity partners as not fully allocated? Or would it be provided as fully allocated? I’m learning to understand the difference between those two; I do understand that there’s a significant difference.

Hon. Adrian Dix: Well, the role of cost recovery, obviously, is people paying for electricity, I think. So I’d say no. This is, again, a transmission line project, the North Coast transmission line. Obviously, the partners will work together to oversee the construction of the line. B.C. Hydro will operate the line. Issues around B.C. Hydro’s broader system are all publicly known in a general sense but not specifically relevant to this agreement.

Larry Neufeld: As a person that does own businesses, having an equity share in a piece of structure, I would be very curious as to understanding the revenue or the…. Obviously, Hydro in the partnership is going to be charging. There’s a value in that line of the electricity, the electrons moving through that line.

I guess I’ll restate my question. How is the value of that electricity determined? How is it apportioned, as per the agreements in clause 1? Is that done through a non-allocated calculation or a fully allocated calculation?

Hon. Adrian Dix: They’re not responsible for the use, we understand, on the transmission line or for earning a rate of return on that transmission line.

[2:20 p.m.]

The electricity that goes through the line is often generated by B.C. Hydro or by B.C. Hydro under contract with another provider and so on. This is about the transmission line and the rate of return. I think the member is talking about something else when he talks about “allocated” and “non-allocated.”

Larry Neufeld: I appreciate that my questions perhaps could be more clear.

The rate of return for an equity investor, how is that calculated?

Hon. Adrian Dix: The asset cost appreciated over time. Hydro, the joint venture partners receive a rate of return based on those costs and the rate of return with that. That’s the way it works. It’s not based on the allocation.

I think what the member is getting at — but I’ll let him decide what he’s getting at — is somehow if the line isn’t successful, do they get less or something? Or if the customers don’t get through, do they get less?

We’re assuming — and I think, looking at the numbers, that a reasonable person would assume — that the line will be full, but regardless, they recover costs from B.C. Hydro ratepayers based on a rate of return on the investment of the line.

Larry Neufeld: I will admit that I don’t know that I actually have ever seen a contract with my own eyes that would represent the flow of electrons through a power line.

[Debra Toporowski / Qwulti’stunaat in the chair.]

This might be an issue on my end. But as an investor, I remain somewhat confused as far as how, if I was deciding…. And I realize that it’s not part of this bill; I don’t have that opportunity. But if I were a representative of a First Nation that was deciding to invest, or if I was representing a First Nation, how would I be able to calculate what that return is and whether that’s a fair value or not?

[2:25 p.m.]

Hon. Adrian Dix: As the member will know…. I don’t think this is actually unusual. It’s based on the capital costs of the line and the return on equity, which is laid out in the agreement.

If B.C. Hydro owned both ends of the line, it wouldn’t necessarily be substantially different than that. So they’re sharing in the return in equity of the line. That’s how the agreement for a transmission line would go, as it would in other energy systems that are differently organized.

Larry Neufeld: I apologize for belabouring this point. I remain confused.

If I was asked to, again, represent someone that was being requested to invest $50 million, $20 million, whatever that number is, I fail to understand how I can take pen to paper and understand if I’m getting a fair return. Perhaps it’s a lack of understanding on my part. I’ll try to rephrase and do this in several parts.

How is the power line equity investor paid? What mechanism pays them?

Hon. Adrian Dix: Well, B.C. Hydro pays them, pays the joint venture partners through lease payments, based on their level of equity and the rate of return agreed to.

The Chair: Member.

Larry Neufeld: Thank you, Chair. Sorry if I didn’t welcome you on the last question.

That’s beginning to make sense. Again, with respect to how, in my mind, thinking back to someone that would be advising a signatory to an agreement under clause 1, would be…. How would I understand if those lease payments are fair, that my client should either cut the cheque or they shouldn’t?

The Chair: Minister.

Hon. Adrian Dix: Thank you very much. Good to see you, hon. Chair.

Because they know the rate of return.

Larry Neufeld: Would the rate of return…? How is that established? Is that an arbitrary number?

That’s really the crux of what I’m trying to get to. I don’t understand where that rate of return would come from. I don’t know what that lease payment would be based on, and I don’t know how to ascertain whether it would be a fair number or not.

Hon. Adrian Dix: Well, the reason they’d be interested is that transmission lines are very safe investments. We have a sense in that the rate of return is based on Fortis’s regulated rate of return through the B.C. Utilities process, which is notionally 9.65. It’s based on that regulated rate of return.

Obviously, the end payment to them is that differential with the cost of borrowing. So it is a good deal, it’s a secure deal, and it’s a safe deal. And it’s based on Fortis, which is a regulated utility in B.C., a private one, and their rate of return on their assets.

Larry Neufeld: So if I’m understanding this correctly, this is a guaranteed rate of return with no opportunity for ups or downs throughout the lifespan of the agreement?

[2:30 p.m.]

Hon. Adrian Dix: It’s a stable and safe investment, a good investment for First Nations. There are other — and will be in the agreements — risk trade-offs, for example. There will be benefits for early completion of the project, which is obviously beneficial to both sides, and so there will be other risk trade-offs. But this is, as you would expect a transmission line to be, a stable and safe investment for First Nations and, effectively, for B.C. Hydro.

Larry Neufeld: That answer does make sense. Again, if I were advising a client who happened to be a signatory or potential signatory to this agreement or an agreement that would be subject to clause 1, I would be very curious as to….

We’ve established this is a guaranteed rate. Over what time frame? Is it the life of the agreement? If so, what is that life? Are there any limits on that lifespan?

Hon. Adrian Dix: It’s generally over the life of the asset, which in this case is 50 years. If there are, for example, opportunities for reinvestment or further expansion, then there may be other opportunities along the line. But in this case, it’s a 50-year expected lifespan for the line.

Larry Neufeld: We’re talking a 50-year lifespan. Again, I don’t know…. I’m assuming that’s reasonable. What I would ask is: is that language included explicitly in these agreements?

Hon. Adrian Dix: Yes.

Larry Neufeld: Again, keeping in this same line of thought, we talked about a guaranteed rate, which is fantastic. And yes, that’s a good rate. We’re indicating that it’s based off of the Fortis regulated return.

I’ll start with my first question. Will it be identical to that rate? Is that in the language of the agreements? Will it stay that way in perpetuity for the life of the agreements?

Hon. Adrian Dix: Well, the member will know, in response to all of these, that the agreements haven’t been finalized. That’s a preface for all the answers.

But we want to give as clear an answer as possible, and that answer is yes.

Larry Neufeld: The regulated return…. Am I assuming that that is something that is provided by the Utilities Commission?

Hon. Adrian Dix: Well, if the member were advising them, he’d know that people have to know what they’re getting when they sign on to an agreement, a project over 50 years. The Fortis rate of return is determined by the Utilities Commission.

In this case, it is being used because this is — and that’s why we’re passing the legislation — the first agreement. There hasn’t been a previous agreement like this. This is used as, essentially, a proxy — the established rate of return for Fortis on its assets.

Larry Neufeld: Thank you to the minister.

I may have misunderstood a previous response then. Am I understanding that the rate of return that will be included in these agreements will be pegged identically to the Fortis rate? Or is it used as a reference?

Hon. Adrian Dix: Pegged identically.

[2:35 p.m.]

Larry Neufeld: Thank you. That’s great. I do appreciate that.

I’m assuming from the previous answer that we know that that is, again, the lifespan of the asset. What I believe that I had understood from one of the previous responses is that, should maintenance activities occur on this line, there are already mechanisms in these agreements that would be signed as part of clause 1, that would be in place automatically, to extend…. Or would a renegotiation of that agreement be required after the lifespan of the asset is expired?

Hon. Adrian Dix: The opportunity for reinvestment will be established in the agreement.

Larry Neufeld: With all due respect, I’m not sure I understand that answer. Is it going to be automatically rolled over, renewed?

Perhaps I didn’t ask correctly. Would it be on automatic rollover renewal? Or would it be required to be renegotiated?

Hon. Adrian Dix: Hon. Member, there are effectively 50 years of payments. After the 50 years, they continue to be co-owners of the asset, but there are no further payments. It’s for 50 years, right? They continue to co-own the asset. The assets still exist, and electricity may be going through them. You know, I’ll personally be 111, so it’ll be good.

There would be a possibility for other reinvestments — those already will be anticipated in the agreement when it’s signed — but essentially, the agreement for the payments is for 50 years.

Larry Neufeld: Thank you to the minister.

[2:40 p.m.]

Again, for the sake of clarity, what I believe I just heard is that the agreement for payments ends after 50 years, but the ownership is in perpetuity. Is that correct?

Hon. Adrian Dix: The co-ownership of the asset continues until we cease needing to use it, effectively. So yes, the asset will continue to be co-owned, but the payments are for 50 years.

Larry Neufeld: Thank you for that answer.

Would the partnership, in the event that these assets do extend past the lifetime of 50 years…? Say they did 70 years, just as a number. I have no idea. Is there a mechanism within the agreements that are signed as part of clause 1 that would either set aside or have the ability to claw back reclamation costs of the assets from all partners — demolition and reclamation costs?

Hon. Adrian Dix: Reclamation, if it were required at that point in the distant future, would be the responsibility of B.C. Hydro.

Larry Neufeld: Thank you for the answer.

Equity investment. As part of the agreements that would be signed under clause 1, will there be a physical equity component that will exchange? I’m asking if participants will all be putting cash into the pot, for lack of a better description.

Hon. Adrian Dix: Yes.

Larry Neufeld: Is there a standard formula? Again, respecting the fact that these agreements are underway, how would B.C. Hydro ratepayers know that equivalent/fair — I’m trying to think of a better word — equivalent agreements are being signed with all nations?

Hon. Adrian Dix: Every nation in phase 2 and in phase 1 will sign effectively the same agreement — that’s what we’re negotiating together — and so they’ll have the same equity opportunity.

Larry Neufeld: Just to clarify, I heard the word “opportunity.” Will it be a requirement or will it be a voluntary investment opportunity by each nation?

Hon. Adrian Dix: Voluntary.

Larry Neufeld: So that, in my mind, brings the question of equitable treatment from one nation to the neighbouring nation. If one nation chooses to put in X number of dollars and the next nation chooses not to, is there a concern that, through the agreement signed under clause 1, it’s going to make a perception of inequity between the neighbouring nations? Is that going to cause a problem with phase 3?

Hon. Adrian Dix: It’s an excellent opportunity for all of the nations, and they all have an equal choice and an equal opportunity.

Larry Neufeld: Will there be an opportunity or has there been…? I will say, will there be an opportunity…? Because, again, respecting the fact that these agreements under clause 1 are still under negotiation…. Is there an opportunity…? We’ve already discussed the payment mechanism to which the asset will receive its rate.

[2:45 p.m.]

Actually, I think I might have just answered my own question, but I think I’m already halfway through it, so I’ll ask it anyway. In fact, I’m certain I answered it, but I’ll throw it out there.

Interjection.

The Chair: Continue, Member.

Larry Neufeld: With respect to the.... Now I’ve lost my train of thought. With respect to the.... Actually, I did lose my train of thought.

I’m going to yield to one of my....

The Chair: Take your time, Member.

Larry Neufeld: I shouldn’t have laughed. It was a good one, too. Okay, I will move on to the next one.

In the agreements that will be signed under clause 1, the government does reference the word “co-ownership.” In that context…. I know we’ve already talked about shared governance. That’s clear. I understand that it’s not shared. I also understand that shared operational control has been established and that that will not be the case. With respect to — I think I may have answered my own question again — shared revenues…. I believe we did talk about that already. I will move ahead again.

What safeguards are in place to prevent further divestment of B.C. Hydro infrastructure, i.e., the infrastructure...? Obviously, this would be in relation to what the language included in those agreements would be under clause 1. What safeguards are in place to prevent one party from divesting equity share or assets associated with that portion of the asset?

Hon. Adrian Dix: I think I answered this question earlier, but the nations would be limited to selling either to B.C. Hydro or to other nations. That’s the limit, as I said to that question earlier. This is fine; it’s important to come at these things a couple of ways, and I understand the concern for the hon. member. It’s a good question, but we discussed that earlier, and that’s the limitation on the ownership.

Larry Neufeld: To the minister, thank you for that. That’s a challenge of jumping around in your questions.

My next one would be: were First Nations engaged in the development of this legislative framework? Secondly, were any of the nations consulted in drafting this bill?

Hon. Adrian Dix: Yes.

Larry Neufeld: Were all of them consulted? How were they chosen?

Hon. Adrian Dix: Well, we’ve listed off the First Nations that are involved in phases 1 and 2 of the line. That’s the full list of nations along the line who had the opportunity to take advantage of this equity opportunity. How were they chosen? They were chosen in that respect and in that way.

The consultation has been significant. Obviously, the legislation is required to proceed with NCTL. It would have been assumed, by the nations, that the legislation was coming forward and that it would allow for this equity opportunity. It wouldn’t make sense to negotiate an equity opportunity that was not permitted.

There have been over 300 meetings between B.C. Hydro, the government and the nations on this question so far. So yes, there has been lots of consultation.

Larry Neufeld: Thank you to the minister for that answer. More specifically, were all of those nations afforded the opportunity to contribute to the drafting of Bill 31?

Hon. Adrian Dix: No, it wasn’t co-drafted in that sense. The intent of the legislation was to enable the agreements that would have been the subject of those hundreds of meetings and negotiations in thousands of hours. The legislation was drafted by the legislative counsel, but obviously, the nations involved are directly affected and were substantially consulted in the matter.

Larry Neufeld: Thank you, Minister. I accept the answer, for sure.

Were the First Nations required to sign NDAs during the consulting or the drafting process of these agreements?

[2:50 p.m.]

Hon. Adrian Dix: Not with respect to the bill, not with respect to the legislation. There were not any NDAs, nor would there really have needed to be any NDAs.

There are NDAs sometimes, at the request of the nations, for the negotiations. These are commercial negotiations. As you might imagine…. So it’s not that there are no NDAs in the detailed negotiations such as this. There are, of course, such NDAs to allow you to go forward, as between the nations, sometimes, and B.C. Hydro.

But on the legislation there were no NDAs signed.

Larry Neufeld: Thank you to the minister, through the Chair.

Were there any NDAs signed with respect to execution or negotiation of the agreements that are subject to clause 1 of this bill?

Hon. Adrian Dix: The agreements haven’t been executed. We’re in the House talking about the legislation now, so for that part of the question, no.

There are some NDAs in place, at the request of the nations, in the discussions and negotiations. But that’s expected.

It’s in a negotiation now, so there are no executed agreements yet, obviously. We’re enabling, here, such agreements to take place, so with that part of the question, it’s no.

There are NDAs involved in negotiations, as there would be in most commercial negotiations of this nature.

Larry Neufeld: To clarify — and I 100 percent agree that NDAs would be incredibly normal when it comes to commercial negotiations — did B.C. Hydro, as the representative of the ratepayers of this province, require an NDA before negotiations were begun under any agreements that would be in clause 1?

Hon. Adrian Dix: The short answer is no.

Let’s say that, in a general sense between the nations…. What I said to the member earlier, which is the need for equality of opportunity, requires transparency between the nations. The nations certainly understand that. I don’t speak for them here. They speak extremely well, as I can imagine the member knows, for themselves. The importance of transparency between the nations is there. If you’re going to have equality of opportunity, people legitimately would want to see that equality of opportunity. But there were no NDAs required, in direct response to the question by the member.

Larry Neufeld: From a person that comes from a business background, that honestly is troubling. When we’re talking about the kind of dollars that are likely to be involved here and not requiring an NDA…. May I understand the rationale behind that?

Hon. Adrian Dix: Let me say, I’m delighted to hear the opposition become advocates for NDAs. Anyway, I think I’ll just leave that. I’ll just leave that. There’s a moment. In this context, I understand. I’m just going to leave that there.

I think in this process…. It’s different than a commercial operation. Say the member had a business and he had four investors, and they were 25 percent, and he was operating the business. Then there might be an NDA and there would be a need to inform the business.

In this case, the nations are the people represented and then, more broadly, the people they represent, the democratic organizations they represent. So the maximum of transparency is actually quite important in this process — right? — to ensure the democratic accountability for the nations. Just as we’re having democratic accountability here, democratic accountability for the nations.

So in a general sense…. You can tell, in response to the question, I’m pretty open about all the details of these agreements, really, as open as we can be. Equally, that was important, in these discussions, that there be trust. You’re building a transmission line, not with one nation — which might be the case for, I don’t know, an LNG project or something else or a project that’s sited in a particular place — but along a line. So the requirement for transparency is greater here, I think, for the nations who are participating.

[2:55 p.m.]

Then, as they go back in their accountability structures and approve agreements, for the people who are part of each of the nations…. If you’re going back, regardless of which nation is involved, and you want your community to approve an agreement, it’s got to be fairly transparent. They’re going to be asking questions, just as the hon. member in this place is asking questions about this legislation.

First Nations would be structured differently, perhaps, than the commercial arrangements the member was thinking of. But in a general sense, this is an open process. B.C. Hydro’s role in it…. Its management line, of course, is regulated by independent regulators. And our role in legislation by this House in passing this legislation which enables it…. Equally, First Nations have similar accountabilities and transparencies required with their communities. So I think a more open process is actually understandable.

In this case, it’s not affecting anybody’s stock price in that sense, which is sometimes the reason why NDAs in such a negotiation would be required until an agreement was announced. This is a different process. The government announced and supported the process. B.C. Hydro did back in January 2024, engaged with First Nations in the summer of 2024. So the relative transparency of all of this, given the important and central nature of the project, I think is actually quite normal and not, as the member suggests, at all disturbing. Quite the contrary. It’s what nations and all of us might expect.

Larry Neufeld: I am going to yield in a moment because I find my mind is wandering a bit, and that might lead to my confusion on this point.

We just discussed NDAs and the rationale of the need for openness. Earlier in the conversation, when it came to a discussion around the public being made aware of these agreements, which don’t require an NDA, I was left with the understanding that that was not reasonable to expect the public to have full access to. Having executed many NDAs in the business world, I am aware that it is very easy to include your decision-making group within that NDA. It’s not the intent to keep information secret. It’s to keep it closed within a group.

Earlier in the conversation, I understood that — and I will get to my question; I think it does require a bit of a preamble — the need for…. I wouldn’t want to call it secrecy, but the lack of transparency on commercial interests was a concern. I’m struggling to reconcile those two. Perhaps the minister could help me understand the difference.

Hon. Adrian Dix: Well, let me say this, then. When the agreements are finalized, they will be very public. We will be recognizing and celebrating them in communities across the North. I think it’s a significant moment for the North. So there will be transparency. There may be some things, as I said to the member earlier, that require commercial confidentiality. But the agreements and what we’ve achieved and what we’re proceeding with — this will be a very public process.

The discussions, in a broad sense, with nations, what’s involved…. There may be some desire, as between nations early on or different nations, to maintain a certain degree of confidentiality as they engage for themselves. But the purpose of creating equality of opportunity and the confidence required to do that…. No special deals, right? This is a deal across the board, differently managed with phase 2 nations and phase 1 nations in these two cases.

My case for a more open process, in this case just in a general sense and not having the discussions be secret and the rates of returns be secret and everything else be secret, is because of the nature of the discussions between First Nations governments, effectively, and B.C. Hydro and, effectively, the government of British Columbia.

[3:00 p.m.]

So that’s the distinction I’d make between the two.

The member need not worry. When agreements are signed, I will be present and delighted and celebrating those agreements. I can assure you I will not disappoint members of the opposition by remaining quiet at that exciting moment, I think, for our province.

Larry Neufeld: I accept the answer, again reconciling in my own mind the need for secrecy, or lack thereof, in this case. Yet when it comes to land agreements or other agreements, the government position appears to be different. I would suggest in this case…. My question would be, what safeguards would the ratepayers of B.C. Hydro have when there are potentially billion-dollar negotiations going on without NDAs signed?

Hon. Adrian Dix: Agreements were approved by, obviously, B.C. Hydro senior management, by the board. In this case, there has been some involvement by the province. So whether there’s an NDA during prior negotiation or not would not change those obligations or responsibilities to the public. Ultimately, amongst other accountabilities would be the discussions that we’ll have, I’m sure, next spring in estimates, for example, and many others — B.C. Hydro, the Utilities Commission and everyone else.

I think the public, which has very significant confidence in B.C. Hydro…. According to independent public opinion surveys, it’s well over 80 percent. Oddly enough, and this may seem incredible to the hon. member, even more popular than the government, which is below 80 percent, I’m told, in public approval. I think there’s a lot of confidence in the senior management, in the board of B.C. Hydro, the work that they do in protecting the public interest, the interests of B.C. Hydro and so on.

I’m not sure the existence of NDAs in and of itself is a protection. You can make an argument. I mean, there are occasions, and the members has cited and talked about this, in commercial agreements between government where things have to be kept confidential. We’ve decided that cabinet discussions are confidential for lots of excellent reasons that have been established over now centuries. But I think our default position should always be, and especially in a very public process like this, to make sure that people have access to the information.

Usually in a negotiation, what you’re talking about isn’t the final agreement, so you don’t necessarily talk about everything. But what’s being talked about is not a secret. People talk about that at all, whether it be…. But you know, and we say this often in labour negotiations, and you’ve heard recently in the labour negotiations that have taken place here in B.C., that bargaining’s for the bargaining table. That doesn’t stop people from talking about their views from time to time. We’ve seen this in recent labour negotiations, and we see it in other negotiations.

I think, ultimately, B.C. Hydro does a good job for the ratepayers, established over time. The third-lowest electricity rates in North America. A recognized rate of return. Appreciated by the public, and boy, I appreciate them when there are windstorms and B.C. Hydro staff are out there working on them and doing an incredible job. I think B.C. Hydro is highly respected in this role.

It doesn’t mean it never makes mistakes. I was the opposition B.C. Hydro critic for a time. My friends at B.C. Hydro may remember that time and the questions I asked. I’m reflective on that process in my current position. But I think the public has a lot of confidence in B.C. Hydro for good reason.

Larry Neufeld: Would the minister be able to assure on the record that B.C. Hydro has…? I’ll rephrase. Are there other commercial interests or commercial agreements that B.C. Hydro has entered into without the use of an NDA?

[3:05 p.m.]

Hon. Adrian Dix: I think the member, to a degree, answered his own questions earlier. With respect to the negotiations that are the subject here of section 1 and are being enabled, effectively, by section 1, NDAs have not been required.

We had all this discussion on the different views on NDAs in different circumstances. I was just teasing the hon. member, but in fact, there are different views on those and the purpose of those NDAs. So I’m sure we’ll be able to ask B.C. Hydro, and I can respond to the member in writing on the question of whether they sign commercial agreements.

Typically, you make a commercial agreement on, say, a price for — I don’t know — computers or something. The price is often kept confidential, for obvious reasons. The vendor has other customers. There are reasons for that.

In this case, these agreements that are the subject are very public agreements. Going forward is a very public process. The negotiations aren’t public. We don’t have stadium seating for them. But with respect to these agreements, NDAs have not been required.

Some have been signed in specific circumstances, but usually at the behest of other parties for good reasons as well. But generally, this is a fairly open process. It makes sense. When you have to go back to your nation and talk about term sheets, you’ve got to say what’s in the term sheet as a government. That’s to do…. Just as I’m here in the Legislature answering questions about the agreements as well.

Larry Neufeld: Thank you to the minister for that.

The reasoning for my questioning is to try and establish if agreements being signed under clause 1 are being treated differently in any way in structure than any other agreement that Hydro may have entered into.

Hon. Adrian Dix: I mean, I think we understand the agreement’s now unique, because we’re enabling this agreement under the law. We know that this is unique, in that respect. It’s the first time we’ve engaged in a co-ownership agreement with First Nations on a project of this sort.

So in that sense, it is unique, and it is different, and that’s why we’re discussing it. If it was just another commercial agreement, it wouldn’t be the subject of legislation. We require this legislation to proceed with the North Coast transmission line.

I’ll spare you another speech with the North Coast transmission line. We’ve had, probably…. Members have heard me quite enough. But that’s the difference.

David Williams: I hate to be a little redundant here, but I just want to clarify a few things.

In terms of the North Coast limited partnership, what will be the joint venture agreement between the First Nations? Is it a limited company or three separate agreements as leased back through the limited company? Maybe you can just clarify that a little bit better.

[3:10 p.m.]

Hon. Adrian Dix: I know the member has been engaged in the debate, so I don’t want to be redundant. But I understand that the agreements are still under negotiation, so we’re enabling these agreements with this legislation. They’re limited partnership agreements. They’ll have an agreement, then a separate contract for B.C. Hydro to construct the transmission line. That’s the nature of the agreement.

David Williams: Thank you, Minister.

Will the First Nation partners be required to contribute any capital for their equity partnerships? And are the equity partnerships equal percentage?

Hon. Adrian Dix: Yes, and equal opportunity across phase 1 and phase 2.

David Williams: Thank you to the minister.

Will the First Nation partners take the same risk as B.C. Hydro if the line is underused, given that B.C. Hydro might bill ratepayers anyways? In other words, the ratepayers are going to be charged a certain percentage. If the line is underutilized or under capacity, who is actually going to foot the bill?

Hon. Adrian Dix: I did answer this question earlier, and that’s okay.

We talked about the Fortis rate of return and the 9.65 percent return, and that’s the answer to the question when you talk about getting paid, as Fortis does, on its capital investments.

That was used as a reasonable basis because Fortis is a regulated utility in B.C. It is a good basis for these negotiations, and that’s the return they will receive. Of course, you take off that return the cost of capital, like you would any other investor.

This is a stable, good investment. It’s why First Nations are interested, why they’re, I think, overall, enthusiastic about this project other than the benefits for their regions and for business and for economic development.

David Williams: I understand that is based on Fortis’s rate of return, so basically, it creates a yield. I also understand that yield is actually created by the B.C. Utilities Commission. They actually look at the rates, and they adjust the rates accordingly.

Is that…? Maybe the minister can just clarify if that’s correct and that’s how Fortis’s rates are determined. Also, staying with that point, if the B.C. Utilities Commission is no longer going to be deciding how the rates are decided, that would be a regulator. Is that correct?

Hon. Adrian Dix: The reason that Fortis was used is that B.C. Hydro doesn’t have a rate of return in the same way as Fortis does. The member will understand the distinction between those two, I’m sure. So because Fortis does have a rate of return and has regulated their current rate of return on their assets and their capital investment as 9.65, that was seen as an effective proxy. It’s not 9.65 percent yet in the agreements because the agreements aren’t finalized, but once they are, that rate of return would be locked in.

[3:15 p.m.]

David Williams: I thank the minister for the last answer.

I’ll move on to another portion of clause 1. With the co-owned facility and the limited partnerships, how will the protections of the Utilities Commission Act be preserved?

It appears that the government is planning to exempt B.C. Hydro from BCUC regulations — specifically, 38, “…utility must provide service;” 41, “No discontinuance without permission”; and 52, “Restraint on disposition.”

Hon. Adrian Dix: B.C. Hydro is still regulated by the BCUC. It’s still the entity that operates the line, so the regulation continues.

If the member is referring…. Again, we had, I think, over a number of questions, a discussion of the certificate of public convenience. If that’s what the member is referring to, that’s another thing on projects over $250 million. But BCUC remains the regulator of B.C. Hydro, which will be operating the line.

The ownership of the line will obviously be with the joint venture partnership, and B.C. Hydro will pay for that through lease payments. But with respect to the role of BCUC, it continues to have a role over B.C. Hydro. B.C. Hydro isn’t receiving any exemption.

One of the reasons why we’re clear about BC Hydro’s rights here — you see that in the section — is also their responsibilities, which continue to be to the B.C. Utilities Commission, as a regulated utility in B.C.

David Williams: Thank you to the minister.

Given that it appears that BCUC has no oversight in this role in the project, who will ensure that the public interest is protected in these agreements? Now that you’re moving away from the B.C. Utilities Commission having oversight on this portion of the transmission lines, if I’m correct, who will have the public interest?

Hon. Adrian Dix: B.C. Hydro operates the line. They’re being regulated by the B.C. Utilities Commission, and so the public interest is maintained in that respect. That was the answer to the previous question. That’s the answer to this one.

Larry Neufeld: I would like to introduce an amendment to clause 1.

The Chair: We will take a short recess and provide copies to the committee.

The committee recessed from 3:17 p.m. to 3:27 p.m.

[Debra Toporowski / Qwulti’stunaat in the chair.]

The Chair: I call the committee back to order. We have an amendment to clause 1:

[CLAUSE 1, by adding the following underlined text as shown after proposed section 12.1:

Reporting

12.2 As soon as practicable after a designation is made in respect of an agreement under section 12.1 (2), the minister must post, on a publicly accessible website maintained by or on behalf of the minister, a report that sets out the following:

(a)the ownership structure, including any equity shares under the agreement;

(b)the projected costs, revenues and ratepayer exposure in relation to the project that is the subject of the agreement;

(c)the anticipated regional economic and employment benefits of the agreement.]

Larry Neufeld: This amendment would require the minister to disclose the ownership structure, including equity shares under the agreement, not to exclude projected costs, revenues and ratepayer exposure, along with the anticipated regional economic and employment benefits.

British Columbia’s public authority, once they have entered into agreements — in most opinions, I would suggest — should have no problem letting the public know the details of those agreements. Hence the amendment.

The Chair: I find the amendment in order and recognize any other members who wish to speak to the amendment.

On the amendment.

Hon. Adrian Dix: Well, there’s no need for this step. It’s unnecessary law-making. We don’t need to add things to the law that don’t need to be in the law. We’ve just answered questions about the equity arrangement and the ownership structure in this House. I’ve made about an hour and 30 minutes of explanation to the Legislature as to why we’re doing it. That was just a subject of a public debate.

We’re in favour of the transmission line; the opposition isn’t. Those are positions that the opposition can defend and that we can defend, for example. So there’s no need for this. These are agreements between First Nations and the provincial government, and First Nations will be taking them to their people.

There’s no need to add a provision like this, and we will be fully accountable, both for the agreements on the North Coast transmission line and for its costs and so on, through other structures. There’s no need to add redundant laws to legislation or to make laws more complex.

[3:30 p.m.]

That’s why I ask members not to accept this but to accept what I’ve been doing, which we always try and do, I think, in our discussions. We should be open about all those questions. Ownership structure, open. Rate of return, open. A straightforward discussion of what I think are the extraordinary benefits to the line, open. That’s what the member is asking for. We don’t need to put it in the law. It’s already happening.

Larry Neufeld: With all due respect to the minister, and I do respect the minister, I would suggest that, yes, I do agree. He has absolutely done a very great job of being transparent.

I suggest, maybe with tongue in cheek, that at some point he may not be the minister. I don’t know how that would happen. I think that this motion actually is important because, yes, the individual that’s sitting in that chair is transparent and open, but there is no guarantee in the future that that’s going to be the case. Having it written into the law that that transparency is required, I think, is quite reasonable.

Hon. Adrian Dix: Just to say that the ownership structure of the partnership is understood. It’s not going to change. As to between the nations…. There may be nations that don’t participate, but that will be public as well.

Some of the issues are a little more, shall we say, unclear. They’re subject to public debate. We believe that this sunlights the opportunities for mining. The mining association believes that, and others, but that will be a subject of public debate, which we’re having right now.

The costs of the projects and the issues of rates are the subject of BCUC review. In short, there’s nothing here that either isn’t happening anyway or that is required. So I guess adding laws that are redundant is not valuable.

I’m sure if my colleague for Peace River South were the Minister of Energy, he would take the same approach I do.

Interjection.

Hon. Adrian Dix: Well, I don’t know. We’ll see, right? Or any other member of the House might be the Minister of Energy.

I think, really, it’s not the Minister of Energy as a person, but it’s the Minister of Energy as an office that you would expect that. That’s why we have the Utilities Commission Act and other requirements. It’s a very public process, not just for the government but for First Nations. Adding additional requirements that aren’t needed isn’t something I favour.

Because of the way I’m answering the question, I’m not hostile to what the members believe — that there should be transparency. I believe there should be transparency. I’m just saying it’s not required. This amendment to the act isn’t required. That’s why I’m asking people not to support this amendment.

Larry Neufeld: I definitely am not trying to be argumentative in any way. I would simply say that the way I read this is that the requirement is to allow the public to view those agreements rather than those of us in the room having the discussions. From that perspective, I would suggest that it is reasonable. Again, I’m not trying to be argumentative.

Hon. Adrian Dix: Well, I wouldn’t agree. The member said we should post the agreements. I don’t think that’s what the amendment says. It’s a report based on the agreements with other things that probably wouldn’t be in the agreement. That is what’s there, but that may be a distinction with a difference.

I don’t think he’s suggesting that the actual agreements needed to be posted on a public website — the commercial agreements. He’s saying a report based on the agreements. What I’m saying to him is that that’s going to happen. We don’t need it to be put in the law.

Jeremy Valeriote: When the minister says “that’s going to happen or that will happen,” I need to understand what the mechanism is that requires that. If the BCUC is not involved…. I understand there is no point in unnecessary legislation, but if it’s not written down somewhere else, I’m inclined to support this, unless there is another mechanism to require it.

Hon. Adrian Dix: With respect to 12.2(a) in the amendment, asked and answered — the Hansard, amongst other things.

[3:35 p.m.]

With respect to issues around revenues and ratepayers, BCUC regulates rates in this province. That issue will be a subject of an ongoing public debate and regular reporting, as it has to, in statements by B.C. Hydro.

In terms of the anticipated regional, economic and employment benefits, that’s really a subject of public debate. I strongly believe in the arguments I’ve made that the member has now heard me make maybe more times than he wishes to hear me make them. But that’s really a subject of public debate.

I’m sure the people who disagree with the approach or want us to build a small nuclear reactor or whatever may have a different view. I’ve made those comparisons clearly. But I’ve made the case for the regional, economic and employment benefits of the agreement. That’s why we’re proceeding. That’s why we started to proceed in 2023.

All of this information, the case for it, has been made by B.C. Hydro, the government, the Premier, myself, a number of the First Nations, the mining association and those who are supporters of clean electricity in our province.

On the other issues, they’re already dealt with elsewhere. Specifically, that’s where they’re dealt with elsewhere and why I think the amendment — while well-intentioned, I absolutely concede — is not necessary and why I won’t be supporting the amendment.

Jeremy Valeriote: Under (a), “the ownership structure, including any equity shares,” I understand the minister has answered that to the best of his ability. But correct me if I’m wrong. I thought I also heard that that negotiation or agreement wouldn’t be put into place until this law is passed.

Is the minister saying that the general ownership structure won’t change and that there are no specifics that would come out after this moment, after the answer that was given earlier in this committee?

Hon. Adrian Dix: The ownership structure of the joint partnership is 50-50. That won’t change. What may change — this will be something that would be announced at the time of the agreements by the nations themselves — is if, say, a First Nation chose not to participate in this exceptional equity opportunity. Obviously, that would be public at that time.

In terms of the ownership structure and the equity participation of First Nations and the government, that’s established, and it’s sort of asked and answered in this discussion. That’s why to put it in the law — and this may be just as a matter of administrative efficiency — is unnecessary.

This is a very public process, and we publicly laid out the structure of the agreement already. So I’m just saying adding it into the law regarding the legislation is not necessary. That’s why I’m opposing it, not because I want to keep the information secret. I just told you the information.

David Williams: I see no problem with more transparency and taking away any possibility of changes happening down the road that ratepayers would not be aware of. By the minister’s own admission here, he said that is a good thing. Transparency is a good thing.

Like my colleague said earlier, there’s no guarantee that down the road under a different ministry, under a different government, things might change. I think that having more transparency and having more accountability, which is this amendment, is a good thing.

We covered the equity shares of the agreements, and as the minister explained, it’s 50-50 currently. I assume they’re never going to change, right? At least that’s what we’ve been told. But the projected cost revenues and the ratepayer exposure may.

From that aspect, I believe that having this amendment in there protects the ratepayers, especially if we actually move away from having the B.C. Utilities Commission overseeing rates.

Hon. Adrian Dix: The B.C. Utilities Commission will continue to oversee rates.

[3:40 p.m.]

The Chair: The question is the amendment to clause 1.

Division has been called.

[3:45 p.m. – 3:50 p.m.]

Amendment negatived on the following division:

YEAS — 4
Kooner	Valeriote	Mok
	Williams
NAYS — 5
Blatherwick	B. Anderson	Dix
Bailey		Shah

Jeremy Valeriote: Since we’ve just voted on an amendment that talks about benefits to British Columbians, I ask a little bit about both provincial and municipal tax revenues. That’s the LNG section of this, which we will get to in a little bit. That’ll be later.

I just want to talk about overall electrical capacity. B.C. Hydro has estimated that about 3,700 megawatts of power need to be added to the grid by 2029 to avoid an electricity deficit. Even with new electricity projects and development, the province could still experience an electricity crunch as early as 2026 if emissions-intensive industries like mining and LNG are electrified.

Given this context, what analysis is being done to determine what the best use of electricity in B.C. is, beyond the three industries specified in this new…? What analysis is being done beyond these three industries that are targeted by this legislation?

Hon. Adrian Dix: Just to the member, we’re on section 1, which is the section that deals with First Nations co-ownership of the North Coast transmission line. I’m not going to not answer his question, but I think there will be quite a bit of opportunity on section 2.

[3:55 p.m.]

I’m guessing. I’m predicting. I could be wrong later on. I’d just say, in a general sense, what he knows, which is that B.C. Hydro — I answered this earlier — over a period of 20 years, has had relatively flat growth. This is because of some achievements in conservation. LED lighting has played a more significant role than people would think in the reduction of residential electricity costs, commercial electricity costs and others. But we’ve also seen a decline in industrial, in large industrial loads by subsectors, particularly forestry.

What we’re seeing now is a change in that. First, we’re seeing…. What we’ve seen over the last number of years, which is an unprecedented increase in population, has effects on all elements of B.C. life but does on energy as well. There’s increasing demand for electricity.

Secondly, as a province, we believe, strongly believe, in our clean energy agenda and are pursuing repeated calls for power. That’s what I said in my answer, which I just answered, to the member for Peace River South, which demonstrates a substantive response to those issues.

Thirdly, B.C. Hydro, in eight of the last 15 years, has exported more power to other provinces than it has imported, and in seven, it’s imported more than it’s exported. We typically import more in drought years.

What is universally true is that because of the outstanding nature of the legacy clean energy system we have and the extraordinary work of B.C. Hydro, we consistently make…. The power we sell in the United States and in Alberta and other places is worth dramatically more than the power we buy. So we’re doing extremely well.

Further, our electricity rates, as the member will know, are, say, 60 percent lower in Vancouver than in Edmonton. And that’s a tribute to public ownership of the resource, which is an important consideration and a continuing consideration. Who are our only competitors? The other publicly owned systems — Manitoba and Quebec.

We have an obligation, as we mete out this new energy demand…. We see it as mining, which is significant. There is demand in LNG, although I wouldn’t expect, necessarily, incremental projects, the ones under construction, being in place in the time frame the member suggests, which is there, and we just acknowledged it — projects such as the Port of Prince Rupert, some forestry projects, continuing increase in demand, and then the areas that were identified in the legislation, which I won’t talk about now but we’ll get to when we get to section 2.

Jeremy Valeriote: I take the minister’s point that we can get to some of these broader questions in section 2, and so I will actually restrict my questions to the North Coast transmission line.

A couple of things that suggest that this wasn’t on the books for a long period that I would like to understand…. I understand that B.C. Hydro’s long-term planning documents, as recently as 2023, didn’t mention the North Coast transmission line. The 2021 IRP only has a few comments associated with transmission to the south coast. The 2023 update doesn’t add anything on the north coast.

Was the new demand in the northwest a surprise? And did the impetus for pushing this come from B.C. Hydro or from the government?

Hon. Adrian Dix: B.C. Hydro’s job, in part, is to serve its customers — residential, commercial and industrial. It’s part of its job, and I think we all agree on this. It’s a huge advantage for B.C. to drive development in our province and jobs and opportunity with clean electricity that makes a difference, and that’s a significant part of it.

With respect to the northwest, the opportunities in critical minerals, which the member himself has spoken of in the Legislature, which are significant, have…. Their importance has become clearer in recent years, as has the fact that the northwest is limited by the current transmission structure. As it was the case with increasing population that we built the Interior-Lower Mainland line, we’re looking at building the North Coast transmission line.

[4:00 p.m.]

In 2023, B.C. Hydro undertook…. I think the original announcement may have been made by the former minister, the Minister of Health, but also by the then B.C. Hydro president, Chris O’Riley. It was to…. We saw this growing development of opportunity in the northwest and the need to serve and to meet the government requirement for electrification in that region.

So we went out and contacted potential industrial and other customers in the region to say: “Well, what will the demand be?” We got, as the member knows, because it’s been detailed in the background document that’s been shared with them, a very significant response in 2023.

As a result of that, B.C. Hydro started to work on the North Coast transmission line, which is absolutely necessary if we’re going to take advantage, for example, of opportunities in the Port of Prince Rupert, in mining, other opportunities, the need for potentially increasing population growth in the northwest and, of course, the need — as far as the government and the amount of government policy was concerned — to support LNG as well.

[Darlene Rotchford in the chair.]

I want to lay it all out there for the member. And the need, under the current policy, to electrify, in order to deal with issues of emissions as well as give us a product that, I think, would be highly regarded around the world.

B.C. Hydro did the review, saw the demand. It was also decided, I’d say between B.C. Hydro and the government, that the best way to consider a North Coast transmission line would be to involve First Nations. That’s what we started to do, as of the summer of 2023.

In January of 2024, B.C. Hydro put out its ten-year capital plan. The Premier announced that at a natural resources conference in January of 2024. We’ve proceeded on that since then. Term sheets were signed in 2025 and so on.

So it is a response to the obvious and historic, I think, opportunity for people in the northwest, a region which, by the way, overall has suffered, I think — I don’t want to make it comparative — a great deal from the relative decline in forest jobs in the province over 20 years, which is significant. Overall employment and income….

This is a region that requires investment and should not be limited in that investment by a lack of access to electricity in a province where a lot of that electricity is produced in the North, most especially in the Peace country but also, of course, in the southeast, in the Columbia.

We don’t build projects like Site C or the ten renewable energy projects or the ones that will come in the coming call for power…. We don’t build them just for Metro Vancouver or Vancouver Island. We build them for the whole province, ensuring that access and this opportunity is available, especially in the northwest.

I’d say, finally, the government has worked hard in our work with the Tāłtān on mining issues in the northwest. I think it’s historic work, and it’s going to be part of opening up an historic opportunity.

I think all of that is involved, I’d say to the member, and that’s a little bit of the history of how we came here. So yes, it wasn’t announced in 2021. That process was in 2023. It identified very significant demand, well above that which will be served by the North Coast transmission line, but you’d assume some projects may or may not happen. Then the government proceeded, and we’re proceeding with First Nations, which is the subject, bringing us back, of section 1.

Jeremy Valeriote: Another late addition seems to be phase 3 of this transmission line. During B.C. Hydro’s virtual open house at the end of June, the map showed phase 1 and phase 2. Phase 3 wasn’t listed. I see it’s got sort of a dashed line with an arrow potentially heading to the Yukon border.

Can the minister tell us when phase 3 was formalized?

Hon. Adrian Dix: Well, obviously, you’re starting a transmission line. You start with phase 1 and phase 2. So those are the things we’re working on, those agreements. We’re starting the work on phase 3 now.

But I would say, to be able to bring that power to, especially, support the mining opportunities in the northwest is significant. I’d also say, and this has been raised in public debate recently, there is no project to the Yukon without the North Coast transmission line. Our vision of this project is to go, essentially, from Prince George to Terrace to Bob Quinn Lake, where I have never been, but I’d like to go. That’s the vision of the project.

[4:05 p.m.]

And then projects that are connecting to that would pay for their connection to the main line. But if you’re going to get to the Yukon, you’ve got to get to Bob Quinn Lake, right? That would be another project. It probably wouldn’t be a B.C. Hydro project, although we’d be very much involved in the management of that project. We’d have to see. We have an agreement with the Yukon government, and there would be lots of other people involved in that.

But that would be, for them, a huge nation-building opportunity, and while it’s not entirely the responsibility of us or B.C. Hydro to satisfy that, we are interested in talking and in encouraging them. Obviously, the Prime Minister, Mr. Carney, has expressed significant interest in that project as well.

But you have to start, and we’re starting in Prince George. We’re going to Terrace, and then we’re going through phase 3. Obviously, the phase 3 discussions with nations and others will happen as we’re building phase 1 and 2.

Jeremy Valeriote: Apologies if this has been canvassed. I had to be out of the room for a few minutes.

On the subject of who will pay for this, I’d like to try and understand tariff supplement 6 and how it will apply and whether some of these industrial customers will pay for the cost of line taps or system reinforcements.

It may not be a simple question, but will customers using the North Coast transmission line pay these costs as mandated by tariff supplement 6? If not, why not?

Hon. Adrian Dix: Well, now we’re talking about part of tariff supplement 6, because there’s a broader review. Tariff supplement 6 contains a relative complexity, and I’ll do my best not to be complex here.

It was the case that projects that were higher than 150 megawatts were treated differently in the way that costs were assigned by B.C. Hydro. I’m simplifying it, but just for people to understand.

This was an artificial level put in place, I believe, by the Social Credit government. It may have been Energy Minister Jack Davis or Energy Minister Jack Weisgerber. I don’t know. I’m reminded that Peace River South is always in my heart, because he was the MLA for Peace River South.

It was put in place for specific reasons around, I think, a specific project on Vancouver Island and some concerns that people had around that project. It’s never been used. It essentially discriminates against projects that are the largest job creating projects, as opposed to…. If you’re 170, you’re treated differently than if you’re 130.

In our view, it would have meant that the projects in question would not go ahead. It was, essentially, the first project that signed on that would be responsible for very significant costs on the line, and that doesn’t make sense.

So that’s the element of tariff supplement 6 that’s involved in the legislation when we refer to that, even though it’s not, obviously, a subject of this section, which deals with First Nations co-ownership.

We’ve developed a very open process of discussion, but this is about First Nations co-ownership. If the member would like further briefings on the question of tariff supplement 6 — which I think is also going to soon be the subject of a BCUC review — not for these portions but for others, then we’d be happy to provide that.

Jeremy Valeriote: I’m concerned that the government is obscuring the outsized role of the LNG lobby in driving this transmission line. I understand the co-ownership is a result of trying to drive this forward, and it is obviously mixed in with critical minerals and port expansion.

But it’s a very direct question. Is Bill 31 a condition of LNG Canada investors making a final investment decision on phase 2 or of Ksi Lisims’ final investment decision?

Hon. Adrian Dix: Well, I think the member is incorrect. Cedar LNG is going forward with existing facilities, the existing line. LNG Canada 1, of course, is not. While it uses electricity for some of its functions, it’s not an electrified line, nor will be LNG Canada 2.

[4:10 p.m.]

If you look at the list of projects that would be potentially affected by that line, there’s only one, and this is not the result of an LNG lobby. It is, though, I would say, part of our commitment to electrification in this whole region. This is part of the debate we had at second reading — which, again, I won’t repeat.

The opposition has argued either for nuclear reactors in the region.... I won’t repeat what I said. I’ll just refer to my closing speech on that question. Others have argued that they should all be gas-fired. That’s not the view of the government. Our clean-electricity advantage should be there for mining, ports, LNG and everything else to reduce emissions, but also because it’s low-cost energy.

I’ll just repeat: the average, levelized price of our call for power is $74, against more than $300 for a small nuclear reactor in the region, just to make that comparison, or Site C, which is about $89 to $96. So clean electricity is a good deal for ratepayers. It’s a good deal for the public, and it’s why we’re supporting it. But it also is a fundamental way to address climate change.

Now, if we have increased demands for electricity, then the only way to do that and not negatively affect climate change is to build out clean electricity. That is what the North Coast transmission line helps to do. You can’t just have wind power projects or dams. You’ve got to deliver the electricity where it’s needed, and you do that through transmission lines.

I just disagree with that characterization. I think the member was putting it forward as a question. I just disagree with it. If you look at the list of projects, really, you’re talking about — and it has not received an FID yet — Ksi Lisims, right? It’s received an environmental assessment certificate, but it hasn’t come forward with its FID as of yet. That would be the one project, on the list of projects that we’re talking about, that would be LNG.

So I think the answer to the question is no.

Jeremy Valeriote: I appreciate the long answer. What I’m going to ask, I guess, is very much more specific. Is the Ksi Lisims FID dependent on the North Coast transmission line being built and on this bill passing?

Hon. Adrian Dix: Well, Ksi Lisims LNG is a commercial decision that they’re making. We have, as a subject of policy from now on, that LNG plants have to be electrified. In that sense, this is helpful to that project, but also helpful on issues of climate change, helpful on broader issues.

The electrification of this line, as opposed to the delivery of energy by other means, is a net positive for that project. I suspect the FID — the member and I have discussed this publicly and privately before — will depend on other factors, including the international market and other cost factors that Ksi Lisims is doing.

I think that the Nisg̱a'a First Nation is doing an outstanding job leading that project, but they’ll be making their decisions, I’m sure, based on a wide number of factors.

Larry Neufeld: I know that we did canvass this when I was up previously, but I find myself confused with a statement that was made during another explanation. I really need to understand this in my mind.

A question to the minister: is it a 50-50 partnership that is being considered under the agreements in clause 1, regardless of the amount of equity invested — i.e. if zero equity is invested, is there still a 50 percent share that is provided?

[4:15 p.m.]

Hon. Adrian Dix: I think what the member is getting at is if, say, some nations choose not to participate, what will the options be? That is being negotiated. There are two options in that respect. Hydro can take a greater percentage of the shares, or there may be some offering of those shares to other nations. So one of those two things would happen.

It’s my expectation, though, that nations will participate and it’ll be 50-50. But that would be the circumstance if, for example, people decided not to participate, not to invest. They, obviously, would miss out on the opportunity, but also that would be an opportunity for others take up those shares in what’s, after all, an excellent investment.

Larry Neufeld: Thank you to the minister.

So perhaps a hypothetical. Client A, potential partner A, puts in — pick a number — ten whatever. Ten jewels. Partner B puts in 30 jewels. Partner C puts in the maximum 50. Is the proportion of the shares allotted as per the amount of equity that is put in? What is the formula that’s being considered? Is that clear?

Hon. Adrian Dix: Yeah. You don’t get offered a portion of a unit of equity. Everyone’s being offered an equitable deal, or an equal deal.

Larry Neufeld: Thank you to the minister.

I remain confused. So if group A puts in ten units and the maximum is 50…. I guess what I’m getting at….

I’ll try to make this less confusing. Is the equity component that’s being offered to each of the First Nations directly proportional to the amount of equity that they are investing, or is everyone given the same proportion of share regardless of the equity that they invest?

Hon. Adrian Dix: That was pretty straightforward. They’re all being offered the same equity.

Larry Neufeld: Okay. So if a nation invests zero, they’re still offered 50 percent share, or their portion of the equity. I’m not sure why…. I’m struggling to explain this. So every nation is getting the same proportion of the shares regardless of whether they invest equity or not.

Hon. Adrian Dix: No. You have to invest to participate. I was going to use another expression. I found those words.

But you have to invest. You’re offered the same opportunity. There’s no requirement that people take it up, but it’s, I think, an excellent long-term arrangement that I expect nations will take up. But we’re still in discussions. So we’ll see.

But I think that you definitely have to invest. There’s no…. Everybody is an investor in the joint venture partnership.

Larry Neufeld: Thank you to the minister for the clarification. That was my original understanding, and one of the responses challenged that in my mind. So thank you for that, and I apologize that it took me that long to make that clear.

With respect to the return…. I know we did spend a fair amount of time on establishing the 9.65 percent. I’ve since been informed that with that rate that we’re using to peg the return to, and of course that was the Fortis rate, there is a 50 percent debt utilization that goes into that component.

[4:20 p.m.]

With the agreements that are being negotiated under clause 1, is there any requirement for debt, or is there any plan for debt to be involved in this project? Or will debt have any influence over the rate of return?

Hon. Adrian Dix: B.C. Hydro, as members know — we had this discussion with the member for Salmon Arm–Shuswap at second reading — operates on an 80-20 debt equity ratio, which will apply to this project for both sides of the project, for the First Nations side and for B.C. Hydro’s.

Larry Neufeld: Thank you for that answer, Minister. On the 80-20, which I understand, will the agreements, signed as part of clause 1, assign that 20 percent proportion of the debt to the partner nation?

Hon. Adrian Dix: It’s 20-80. Effectively, the equity investment is 10-10; that’s 20. Then B.C. Hydro will manage the debt for both sides — for good reason, because it’s in a good position to manage the debt at the lowest cost. That’s the way the program will work. The equity investments are there. The rest is debt — which, as with all projects, from Site C to all the others, is managed by B.C. Hydro.

Larry Neufeld: Another hypothetical. For any agreement that may be signed under clause 1, in the unlikely eventuality that the line is not successful or is underutilized, would the nation partner remain responsible for that 20 percent debt if the partnership were, for whatever reason, to dissolve? Or does that revert back to Hydro?

Hon. Adrian Dix: This is an asset that’s put in place. They get a return on the asset, as we discussed earlier. In this case, it’s 20 percent equity, 80 percent debt. Sometimes we flip around. Sometimes maybe I flip around — just to be clear on what that is.

This asset is going to be successful in any event. The asset is put in place, and then the joint venture partners receive the return for that asset, which is pegged, as we discussed earlier, at 9.65 percent.

Larry Neufeld: Thank you for that answer. I believe that I’m understanding better.

In that vein of thought process, when this offer is made to the partners, when the financial offer is written down and it’s presented, there clearly has to be a value there that needs to be established, as far as the amount that’s being asked to be invested.

How is that amount assessed? Is that something that Hydro comes up with? Is there a third-party assessor? Again, thinking from the hypothetical vein, if I were advising a nation whether to invest or not, how would we establish the fair market value of what they’re being asked to invest in?

[4:25 p.m.]

Hon. Adrian Dix: It’s the capital cost of the line by a class 3 estimate at the time that definitive agreements are put in place. It’s independently reviewed, which parties who are investing that kind of money would want. Then their benefit is 9.65 percent on their investment — obviously, minus the cost of borrowing — for profit. The member will understand that.

That’s how that’s dealt with, and that’s how it will be dealt with — a class 3 estimate, time-dependent agreement, independently reviewed. The 9.65 applies to the capital investment at that time.

Larry Neufeld: Thank you for the answer. That makes sense.

With respect to debt financing and the partner nations that would be asked to invest, are there any restrictions on the proportion of cash? Can they borrow 100 percent of the investment? Are there any restrictions on it? How is that controlled?

Hon. Adrian Dix: There are really no limitations now. They have to provide their equity. How they get that is, as it would be with anyone else, their business. How they get that, should they borrow their equity, would be a discussion between them and the financial institution or whoever they’re borrowing from, but there are no restrictions in the way I think the member was suggesting.

Larry Neufeld: Thank you for the answer, Minister. To be clear in my mind, 100 percent debt financing would be allowed under the agreements that would be signed from clause 1.

Hon. Adrian Dix: There’s an equity share, and there’s a debt share. Like anyone else who’s participating in that, how they provide their equity share will be subject to their financial arrangements. They’re providing equity, as B.C. Hydro is, based on every other B.C. Hydro project. How they provide that equity is their business.

David Williams: In subsection (2)(a) it states: “a limited partnership through which the authority and a First Nation hold ownership interests in a part of one of the following, as specified in the agreement: (i) the phase 1 project; (ii) the phase 2 project; (iii) the phase 3 project.”

Can the minister clarify whether a nation can only be a partner in one phase of the project?

Hon. Adrian Dix: The participation in each phase of the line depends entirely on geography. Just to be clear, for all the participating nations in part 1, which is Prince George–Fraser Lake, that would obviously be the only part that they would participate in.

[4:30 p.m.]

There may be some overlap between part 2 and part 3 as one turns the corner north, depending on the nation. That’s yet to be determined, so that’s possible. In any event, it’s entirely dependent on geography. The part 1 nations would not be purchasing into part 3, for example.

David Williams: Thank you to the minister.

In subsection 2(c), can the minister clarify what a potential asset that can be transferred or assigned through an order in council might be?

Hon. Adrian Dix: Hydro may construct the line on behalf of the partnership then turn it over to the partnership. That’s what it refers to.

David Williams: Thank you to the minister. Could that same asset, at a later date, be transferred back to B.C. Hydro through an order in council?

Hon. Adrian Dix: B.C. Hydro doesn’t breach its agreements.

David Williams: Thank you, Minister.

Would a First Nation be able to transfer the asset to another First Nation or non–First Nation private entity?

Hon. Adrian Dix: We’ve answered this question a couple of times. The First Nation would have two options in terms of that: one, to another participant in the process — that is possible, another part of the partnership — or, alternatively, to B.C. Hydro.

David Williams: Thank you, Minister.

Can the minister clarify whether subsection (3) retroactively overrides any other legislation, specifically for the North Coast transmission line, or will this also affect current and future projects?

Hon. Adrian Dix: There was some discussion, I think, by the member for Peace River South of this question at second reading. Happy to respond.

B.C. Hydro and First Nations are in ongoing negotiations. We’ve established that. Once an agreement has been reached, it will then be brought to cabinet to designate. Cabinet cannot designate an agreement in real time, obviously. The retroactivity language mirrors existing language as is currently in the Hydro and Power Authority Act that allows cabinet to designate B.C. Hydro agreements for support services.

We’re not talking about open-ended authority here in any way. Cabinet can only designate agreements that relate to specific parameters related to the NCTL project itself. Examples include ownership through limited partnerships, construction and operation of the NCTL transmission line, asset transfer, service provision and payments between B.C. Hydro and the partnership — all related to NCTL.

These are clearly defined in the legislation to ensure transparency and accountability.

David Williams: Thank you, Minister, for clarifying.

Going back to the B.C. Utilities Commission, I understand they’ll have limited or no oversight in this project once it goes to a regulator. That being said, who is going to ensure that the public interests are protected in these agreements?

[4:35 p.m.]

Hon. Adrian Dix: The B.C. Utilities Commission. That’s the reason this has been laid out in this way. It continues to have its authority over B.C. Hydro, which is building and operating the transmission line.

The purpose of this agreement is not to in some way evade B.C. Utilities Commission oversight, and it does not.

Larry Neufeld: With respect to…. And I do appreciate the minister's previous answer around the retroactive statement, around the retroactivity clause. I don't know that this has actually been established in any of the conversations that we've had to date, though.

What agreements are potentially subject to this retroactive clause that's included in the bill? Which ones will be changed?

Hon. Adrian Dix: The designated agreements referred to in the section of the act that only relate to NCTL.

Larry Neufeld: Is there any language that would prevent…? Actually, I'll accept that.

I would like to introduce an amendment, please.

The Chair: Okay. Member for Peace River South, read your amendment.

Larry Neufeld: This amendment would restrict co-ownership of North Coast facilities. I know that we have discussed it.

The Chair: My apologies, Member. You just have to move your amendment.

Larry Neufeld: Okay. May I move amendments to clause 1 of Bill 31?

[Section 1 is amended by adding the following:

12.1 (2) (f) any agreement entered into must restrict the transfer, assignment or sale of a North Coast co-owned facility unless it

(i)is a return to the authority, and

(ii)it is not transferred, assigned or sold for more than the co-owners original investment in the facility.]

The Chair: Yes. Go ahead, Member.

On the amendment.

Larry Neufeld: This amendment would restrict co-ownership of North Coast facilities. I do respect that that has been discussed more than once, but again, I think it’s valid to put that into legislation for the simple fact that it would ensure that that ownership would stay as intended.

Any First Nation who enters into agreement with B.C. Hydro for co-ownership cannot sell their ownership off to a third-party organization. They can only sell their ownership back to the authority for the same amount that they paid for it to become a co-owner.

The Chair: Thank you, Member. We will take a short five-minute recess while we get copies made for everyone.

The committee recessed from 4:37 p.m. to 4:44 p.m.

[Darlene Rotchford in the chair.]

The Chair: Okay, we’ll call the committee back to order.

We have an amendment in front of us.

Hon. Adrian Dix: Just to speak briefly in response to the amendment…. I believe the Lieutenant Governor is coming soon, so we’ll be adjourning, if that’s all right with members, after I give a little bit of my response. You’ll hear my response.

[4:45 p.m.]

Just in general, I think these provisions are subject to the agreements themselves, and they should be. When you’re going into an agreement, these are the questions you negotiate. Our agreements are limited, in other words, to the participation of those along the lines.

I just note that the value of the agreement does depreciate over time, so the effect of the beginning evaluation isn’t as important. It wouldn’t have any effect really, I think — what’s happening here. So I’m not in support of the amendment.

I understand what the member is doing. He’s expressing the concern — and this is why it’s in the agreement, why I’ve been explicit about what’s in the agreement — that it’s the potential for a First Nation member of the limited partnership to sell outside of the First Nation. He’s trying to ensure that that doesn’t happen here.

So are we. We believe they should be subject to the actual agreements with First Nations, as they would be in a commercial thing, and that there are other small problems with the amendment, so we don’t support the amendment. But that said, we understand the intent of it.

With that, hon. Chair, I move that the committee rise and report progress and ask leave to sit again.

Motion approved.

The Chair: The committee stands adjourned until our next sitting.

The committee rose at 4:46 p.m.