BC Utilities Commission launches inquiry into gasoline and diesel prices

On May 21, 2019, the BC government enacted an Order-in-Council directing the British Columbia Utilities Commission (BCUC) to conduct an inquiry into gasoline and diesel prices (Gas Prices Inquiry), in response to record-high prices in BC, and particularly in Metro Vancouver.

The ultimate goal of the Gas Prices Inquiry is to advise on what the provincial government can do to moderate fluctuations and increases in these prices. The Order-in-Council sets out the terms of reference of this Inquiry and directs the BCUC to look into:

• the differences, if any, and reasons for differences in retail and refining margins between BC and the rest of Canada;
• the differences, if any, and reasons for differences in retail margins within BC;
• factors that have contributed to increases in retail and wholesale gasoline and diesel prices, including refinery access, storage, refinery and pipeline capacity, wholesale and retail market sizes and demand, methods of distribution to retailers, and seasonal variations in supply and demand;
• how prices are affected by competition or other factors; and
• the measures used in other Canadian and North American jurisdictions to enhance transparency in gasoline and diesel prices.

The BCUC has been directed not to inquire into the effects of other provincial laws or policies, including fuel taxes and carbon tax.  The terms of reference are silent about the effects of the proposed expansion of the Trans Mountain pipeline.

The BCUC must report its findings to the provincial government by August 30, 2019.

The BCUC has now set the process and timeline it will follow in the Gas Prices Inquiry. As a first step, the BCUC has requested written reports from two independent consultants:  the Deetken Group and Navius Research Inc.  The Deetken Group will prepare a two-phased report to provide, in phase 1, an overview of the BC gasoline and diesel market and in phase 2, an analysis of the factors that have contributed to the difference in refining and retail margins between BC and other Canadian markets since 2015. The first phase is due on June 20, and the second phase is due on July 10.  Navius Research Inc. will prepare a report to provide a jurisdictional scan of the oversight and the degree of transparency in gasoline and diesel prices.  This report is due on June 20.

The BCUC has invited interveners to register by June 13, and to provide any expert evidence and comments on the consultant reports by June 27.  As part of the Gas Prices Inquiry, the BCUC will also seek expert evidence and comments from parties that are actively involved in the gasoline and diesel industry, such as refiners, transportation and storage companies, wholesalers, distributors, marketers, retailers, government, and regulators. The BCUC has powers under the Utilities Commission Act to compel witnesses and order disclosure.

Oral hearings will be held from July 17–20 in Vancouver, and will be open to the public, with full transcripts posted online. Letters of comment from the general public will be accepted until August 8, 2019.

The short timeline and process adopted for the Gas Prices Inquiry are reminiscent of the BCUC’s 2017 inquiry regarding the Site C dam. The Site C inquiry was also conducted in a limited timeframe (four-and-a-half months compared to three months for this inquiry), and relied heavily on reports prepared by Deloitte. The BCUC’s findings may draw significantly from the Deetken Group and Navius Research Inc.’s reports due to the truncated timeline in the Gas Prices Inquiry. 

The authors wish to thank summer student Dylan Braam for his help in preparing this legal update.