Regulatory FAQ

Utility regulation in Canada aims to balance the interests of consumers, utility companies, and the public. Its key objectives include ensuring fair pricing, service quality, and access to essential services for consumers. Regulation manages natural monopolies, allows utilities to recover costs, and prevents exploitation. It also facilitates government policy implementation, oversees critical infrastructure development, and incorporates environmental considerations.

Midgard provides regulatory consulting services tailored for the gas and electric utility sectors, covering generation, transmission, and distribution. With experience working for both interveners and utility boards, we offer in-depth knowledge of regulatory policy reviews, asset management, and quantitative benchmarking. Additionally, we support strategic planning, including resource assessments, capital project evaluations, and preparing regulatory filings.

Interveners are individuals, groups, or organizations that participate in regulatory proceedings to provide input, present evidence, or challenge aspects of utility applications. They represent diverse interests, including consumer advocates, environmental groups, and industry stakeholders.

A cost-of-service model is a method used to set the rates utilities can charge customers. It allows utilities to recover their operating costs, including expenses, taxes, depreciation, and a reasonable return on investment. This model ensures financial stability for utilities while providing fair rates to consumers. Key components include the utility's revenue requirement, cost allocation to customer classes, and rate design.

PBR is a regulatory approach that emphasizes achieving desired outcomes rather than specifying how those outcomes should be reached. PBR establishes measurable performance goals and targets for regulated entities, providing them with the flexibility to determine how to meet these standards. Key components include performance metrics, benchmarks for evaluation, and incentive mechanisms that reward good performance or penalize poor performance through adjustments to utility rates.

The Utilities Commission Act (UCA) is British Columbia's main law governing public utilities, establishing the British Columbia Utilities Commission (BCUC) and defining its regulatory role. The UCA applies to entities operating facilities or equipment that provide energy services, such as electricity or natural gas, to the public or to corporations for compensation.

The Clean Energy Act is British Columbia's foundational law for setting goals and guidelines in the electricity sector. Enacted in 2010, it establishes the province's energy objectives, including delivering clean electricity to grid-connected customers, promoting renewable energy use, supporting development in First Nations and rural communities, and reducing greenhouse gas emissions.

The BCUC is an independent agency regulating utilities and services in British Columbia. It oversees energy utilities, sets rates for basic automobile insurance from the Insurance Corporation of BC (ICBC), regulates common carrier pipelines, and ensures the reliability of the electrical transmission grid. With quasi-judicial authority, the BCUC issues binding rulings based on various statutes, including the Utilities Commission Act. It prioritizes fair, transparent processes and consumer protection while implementing government energy policies. The BCUC has been self-funded through levies on regulated utilities since 1988.

The BCUC reviews various applications related to utilities and energy services. This includes Certificates of Public Convenience and Necessity (CPCNs) for major projects, rate applications to ensure fair pricing, and infrastructure development approvals. The BCUC also assesses energy supply contracts and approves utilities' securities issuances. Additionally, it regulates basic automobile insurance rates for the ICBC and reviews complaints from ratepayers. The Commission addresses energy-related matters referred by Cabinet and may grant regulatory exemptions when appropriate.

A CPCN is a regulatory approval required for companies providing essential public services in British Columbia. It ensures that new projects meet regulatory requirements, serve the public interest, and deliver value to ratepayers. Companies must apply for a CPCN before constructing facilities or offering services. The application process includes preparation, submission to the British Columbia Utilities Commission (BCUC), a review for necessity and public interest, and final approval.