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The area of the Peace River where the proposed Site C hydroeletric dam would be built near Fort St. John, B.C.

Deborah Baic/The Globe and Mail

Weeks before the B.C. cabinet circumvented an independent utilities watchdog and approved the $8.8-billion Site C hydro dam, Energy Minister Bill Bennett's own hand-picked panel of experts advised him to restore the role of the "essential" BC Utilities Commission in scrutinizing such projects.

Mr. Bennett had commissioned a review of the BCUC to determine if the regulator could be made more efficient. In an interim report delivered in October – which was posted online with no fanfare – the panel concluded the agency should be strengthened and its independence restored so that it could set rates and review proposed capital projects and supply contracts in the public interest.

The panel members, including former BC Hydro president Mike Costello, delivered their final report in November, but officials from Mr. Bennett's ministry declined to provide a copy, saying it is still under review.

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The 83-page interim report calls for the government to restore "a strong and independent BCUC," with measures designed to end a crisis of confidence the government has shown in the agency.

In an interview on Monday, Mr. Bennett said he intends to follow the panel's recommendations in the coming year, but he has no qualms about making the Site C decision without the benefit of a regulatory review.

"We need to work more closely with the BCUC – we accept that," he said. "But we are duly elected to make the big decisions. Site C has been studied to death."

Site C is just the latest major initiative the B.C. Liberal government has exempted from a BCUC review. The Northwest Transmission Line, which has gone well over budget, as well as upgrades to the Mica and Revelstoke dams and the Smart Meter program were also taken out of the commission's hands.

The panel admonished the government for that. "The existence of an independent expert commission is more important than ever today. By regulating monopolies, the BCUC provides an essential public service," the report says. Every year, British Columbians pay around $4-billion to BC Hydro for electricity and another $4-billion a year in vehicle insurance premiums.

"Unfortunately, the government and key stakeholders have less confidence in the BCUC than in the past. Rectifying this requires restoring the commission's independence within its mandate and increasing the commission's expertise and credibility."

Site C is the largest infrastructure project in the province's history, and an environmental review last year concluded that questions of cost and need would best be judged by the utility's regulator.

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At the time, Mr. Bennett dismissed the recommendation, saying he did not want to expose the project to the BCUC's review process. "Frankly, a group of unelected bureaucrats and lawyers would have decided the future of energy policy in British Columbia," he said then.

The panel anticipated his objection, and suggested the government can still have the final say on whether to build. But it argued that having a public process and independent verification of projects and plans has "significant benefits," even if only in the form of recommendations to cabinet.

Adrian Dix, the NDP critic for BC Hydro, said the report, which has only just come to light, casts a shadow over the cabinet decision on Site C.

"What you have here is a pretty clear statement of the important role of the BCUC and a clear statement of why the government decision to exempt itself from the law on Site C is so misguided."

Sarah Kahn, a lawyer for the BC Public Interest Advocacy Centre, a coalition advocating on behalf of low- and fixed-income people, frequently appears at the BCUC to ensure that BC Hydro decisions are made in the best interest of ratepayers, particularly those who cannot afford increased costs.

"We are concerned this class of ratepayers will be stuck footing the bill for a massive project with no public costing and need review," she said. "We might ultimately support Site C, but we think the BCUC is the independent expert tribunal specifically set up to review projects like this."

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