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Construction on the North Coast transmission line is not expected to start until later this year, but last week BC Hydro took “a key step toward securing a major customer” for its electricity: Ksi Lisims LNG.
BC Hydro and Ksi Lisims LNG have signed a memorandum of understanding that “provides clarity on how and when BC Hydro will deliver as much as 600 megawatts of clean electricity to the proposed floating LNG facility,” according to the government’s press release. Energy Minister Adrian Dix hailed the agreement as a key step toward Ksi Lisims’ final investment decision, which is expected later this year.
The details of the agreement will not be made public, a BC Hydro spokesperson told The Narwhal in an email, because it contains confidential information about Ksi Lisims.
The Ksi Lisims LNG project is expected to consume as much electricity as 250,000 B.C. homes use in a year. How BC Hydro plans to supply that power — and what it means for the broader grid — has not been disclosed. But a key piece is building the multibillion-dollar transmission line. In December, Dix signed a cabinet order outlining many of the terms BC Hydro and North Coast transmission line customers will operate under, including that the costs for the project be recouped via hydro rates.
The most recent cost estimate for the first two phases of the North Coast transmission line is $6 billion, double BC Hydro’s initial $3-billion estimate. The third phase of the project, which will run high-voltage transmission lines north from Terrace, B.C., to Bob Quinn Lake near the Alaska border, has not yet been costed. B.C. is currently negotiating with the Canadian government to secure federal funding for the project.
At the Natural Resources Forum in Prince George last week, Premier David Eby told the crowd the North Coast transmission line will deliver the certainty major projects need to invest in B.C. Photo: Province of B.C. / Flickr The B.C. government estimates the projects served by the new transmission line could yield $950 million per year in revenue for the provincial and local governments and boost B.C.’s gross domestic product by “nearly $10 billion per year.” Ksi Lisims is “expected to attract nearly $30 billion in investment,” according to the province.
But in order to lock in those economic benefits, BC Hydro has to provide “cost certainty” to those potential new customers. If that means reducing the amount of money private companies would otherwise be expected to pay, BC Hydro will have to find other ways of recovering those costs.
“Rate payers are going to pay in the end because [these projects] are going to need so much electricity that supply is not going to be able to meet demand and prices are going to have to go up,” explained Andy Hira, a political science professor and director of the Clean Energy Research Group at Simon Fraser University.
The North Coast transmission line will primarily serve industrial customers, including mining projects and the Port of Prince Rupert. The B.C. government has not been shy about promoting the project as a boon for private companies it hopes will invest in the province.
“This is the reliability companies can count on, every hour of every day,” Premier David Eby told a crowd at the Natural Resources Forum in Prince George, B.C., on Jan. 20. “Certainty that power will be there when companies need it. Certainty that it will be available at a predictable cost. That certainty is what turns proposals into final investment decisions.”
But here’s why that cost certainty could mean higher hydro costs for British Columbians. A cabinet order Dix signed in December could spare large North Coast power users from paying millions to hook into the power grid.
The order includes new contracts specifically for North Coast transmission line customers. One of those contracts deletes a handful of words from a decades-old contract called tariff supplement 6, which requires new industrial customers seeking more than 150 megawatts to pay the costs of generating and transmitting the power beyond that threshold.
By prioritizing cheap power for power-hungry industries like LNG and mining, B.C. is “mortgaging the possibility of diversifying the province’s economy,” according to Andy Hira, a political science professor and director of the Clean Energy Research Group at Simon Fraser University. Photo: Province of B.C. / Flickr “This was an important protection for other customers and was put in place in the 1990s after a negotiation overseen by the BC Utilities Commission,” Richard Mason, a former BC Utilities Commission member, told The Narwhal. “New large loads using the North Coast transmission line will almost certainly require BC Hydro to add new generation, raising the average cost for everyone.”The tweak in the new contracts seems to let large projects, like Ksi Lisims, seeking to connect to the North Coast transmission line off the hook for extra generation and transmission costs they would otherwise be required to pay.
“In other words, new customers with large loads won’t have to contribute to any extra transmission or generation cost,” Mason said. “These costs will now be socialized across all BC Hydro’s customers.”
The Energy Ministry did not directly address detailed questions from The Narwhal about the changes. An emailed, unattributed statement from the ministry confirmed “those costs do not apply to new large projects in specific industrial sectors connecting to the BC Hydro system in the North Coast region” under a new contract created by Dix’s order.
The implications of that change are concerning to Hira.
“The fact that they’re doing this behind closed doors, without any public discussion — that they’re passing on potentially huge costs to taxpayers and not providing any justification — is really alarming,” he said.
The Narwhal asked both the Energy Ministry and BC Hydro how any additional generation or transmission costs would be recouped and whether the government has estimated how much those costs could be for North Coast transmission line customers.
In its statement, the energy ministry confirmed those costs “will be recovered from all BC Hydro ratepayers, including those industrial customers.”
The statement did not include any mention of a cost estimate but did note that large industrial customers connected to the North Coast transmission line will pay BC Hydro for the electricity they use, as all BC Hydro customers do. North Coast transmission line customers will also have to pay a security deposit to BC Hydro and cover the cost of power lines to their connection point.
The first phase of the North Coast transmission line will help boost electrification at the Port of Prince Rupert. The second phase of the project will run north toward the Alaska border, allowing remote mining and LNG projects the opportunity to electrify their operations. Photo: Marty Clemens / The Narwhal The B.C. government has considered making changes to tariff supplement 6 since at least 2024. A briefing note prepared for Eby in March 2024 outlined the potential for an unprecedented increase in industrial electricity demand, driven mainly by large industrial customers. Requiring LNG, mining and other companies to pay the costs required under tariff supplement 6 “could be prohibitive,” the document stated.
But companies that expect to reap huge profits from B.C.’s natural resources are well positioned to pay their own costs, Hira argued.
“The government can’t state that companies that are prepared to invest millions in an LNG pipeline and port facilities can’t afford to pay an electricity connection fee — it simply doesn’t make sense,” he said.
In addition to Ksi Lisims, the North Coast transmission line could serve “half a dozen private mining projects worth $50 billion in investment,” according to Mining and Critical Minerals Minister Jagrup Brar.
Under the new contracts in Dix’s December order, none will be required to pay the extra generation and transmission costs required under tariff supplement 6. The Energy Ministry did not respond when asked how much the change could save eligible projects.
However, another LNG project on the north coast provides a hint. Cedar LNG, near Kitimat, B.C., was subject to tariff supplement 6, seemingly for the first time in the transmission contract’s 30-year history.
To get Cedar LNG connected to the power grid, the provincial government opted to contribute $200 million to help build a new 287-kilovolt transmission line and other electrical infrastructure in July 2025. The floating liquefaction and export terminal could produce three million tonnes of LNG per year for export to Asian markets, using 214 megawatts of electricity.Neither the province nor Cedar LNG replied to questions about how much the company may have contributed toward the transmission infrastructure.If all of the anticipated North Coast transmission line projects come with similar transmission costs, the cost to BC Hydro could be substantial, even before considering the cost of any new electricity-generating capacity that might be needed to meet the new power demand.
If electricity prices in B.C. do increase significantly, Hira pointed out B.C. could miss out on attracting other industries to invest in the province. Instead, he said, the province seems to be doubling down on natural resource extraction.
“You’re mortgaging the possibility of diversifying the province’s economy.”