Whereas private utilities are required to pay property taxes on properties including rights-of-way for distribution and transmission lines; And whereas BC Hydro is authorized by provincial law to pay grants-in-lieu to local governments rather than paying property taxes: And whereas this inequity has been an ongoing issue of importance to local governments, especially regional districts where the majority of distribution and transmission lines are located, but for which no property taxes may be collected: Therefore be it resolved that UBCM request the Minister of Finance to review the issue of grants-in-lieu paid by BC Hydro with respect to its transmission and distribution assets as promised during the preparation of Budget 2012.
Ministry of Finance BC Hydro is a Crown agent, and as such, is immune from taxation. Governments have directed BC Hydro to pay grants in lieu of property taxation for three types of property: land and buildings, distribution and transmission assets, and generating facilities. Municipalities and regional districts receive grants in lieu of tax on land and buildings owned by BC Hydro, comparable to what BC Hydro would pay on these assets if taxable. Grant payments for land and buildings made to the Surveyor of Taxes for property in rural areas are credited to the regional district. Only municipalities receive grants with respect to distribution and transmission assets based on 1 per cent of revenues within the municipality. Grants for generating facilities are paid to the host jurisdiction and affected jurisdictions, both of which could include regional districts, by formula based on the rated capacity of the facility. That formula was revisited, and payments enhanced, in 2006. As the incumbent electric utility in the majority of the province, BC Hydro has an obligation to provide service to residents across British Columbia. Residents and businesses across the province benefit from among the lowest electricity rates in North America, because of the transmission network that connects its heritage generating assets to the communities where it is used, while BC Hydros distribution network ensures that it is available in rural and urban communities. The transmission infrastructure in local jurisdictions is essential to this service and the distribution infrastructure in these jurisdictions directly serves local residents. The government is committed to making life more affordable for British Columbians. Any increase in the costs of the grant in lieu program would flow through as a cost increase to ratepayers. As a result, the government does not intend to begin paying grants on distribution and transmission assets on a basis equivalent to local property taxation.