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Infrastructure &
Finance Division

Regional District Financial Management of BC Hydro Payments in lieu of Taxes


Circular No. 10:14
ARCS File#: 195-20


September 24, 2010

To: Selected Regional District Chief Administrative Officers and Chief Financial Officers

Re: Regional District Financial Management of BC Hydro Payments in lieu of Taxes

This circular is intended to provide advice and direction to regional districts (RDs) that receive payments in lieu of taxes in respect of BC Hydro generating facilities.

BC Hydro makes Payments in lieu of Taxes (PILT) to RDs (and municipalities) in respect of electricity generating facilities located within an electoral area. The current scheme of BC Hydro PILT was introduced in 1989, providing for payments to both municipalities and RDs. The formula for calculating the amount of the payments to individual local governments is not the subject of this circular. However, based on the formula, the amounts of the payments are established by Order in Council on a periodic basis, under the authority of the Hydro and Power Authority Act. The current amounts are described in OIC No. 796/08, with 2008 being the base year for the amounts.

Ministry Circular No. 90:09 provided advice and direction to RDs about how the PILT should be managed. This circular updates that advice and direction.

The payments by BC Hydro are “in lieu of taxes”, for specific facilities, and must be managed by RDs within the framework of financing services. This leads to the following:

  • The PILT received for each electricity generating facility should be managed separately in the context of its specific location;
  • The PILT must be shown as revenue in the appropriate RD service budgets; and
  • The PILT must only be shown as revenue for service(s) for which the service area (SA) includes the location of the specific facility for which the PILT is paid.

Circular No. 90:09 described three options for managing the PILT in respect of how the payments should be distributed among services. This update describes a broader range of options, as follows: Director, Local Government Finance


  1. Apply the entire PILT to the general administration service, for which the SA is the entire RD. This option provides for the benefit of the PILT to be region-wide, since it effectively reduces the amount of the general administration requisition. The general administration service can only be used to fund administration costs that cannot be attributed to other services [ref: s. 803.1(1), Local Government Act].

  2. Apply the entire PILT to another service for which the SA is the entire RD. This option also provides for the benefit of the PILT to be region-wide, but allows the board to direct the funding to another specific region-wide service, as an alternative to the general administration service.

  3. Apply the PILT to a group of services for which each of the SAs is the entire RD. This option also provides for the benefit of the PILT to be region-wide. However, the board can determine a particular distribution of the PILT among the other region-wide services. A possible basis of the distribution would be to pro-rate the PILT among those services according to the relative requisition for each service; however, the board could determine any basis of distribution that it wishes.

  4. Apply the PILT for the specific facility to the group of services for which each of the SA includes the location of the specific facility. That is, no amount of the PILT should be applied to services that do not include the specific facility. This option is more complex, since the benefit of the PILT will be variable. A specific facility will, in addition to being in the SA for general administration and other region-wide services, be in the SA of services that include:
  • all electoral areas (e.g., electoral area administration);
  • the single electoral area (e.g., grants-in-aid); and
  • potentially, a local or sub-regional area (e.g., fire protection, recreation).

For this option, the board will need to determine how the PILT is to be distributed among the group of services, as follows:

  • as a default, the PILT should be pro-rated according to the amount of the requisition for each of the services (from region-wide to local); or
  • the board could determine an alternative basis of distribution as it wishes.

Each RD that receives a BC Hydro PILT will have a different set of circumstances, in relation to both the significance of the amount of PILT and the services to which the PILT may be applied. It is recommended that the board make a specific decision on which option to choose, if that has not been done previously. As a financial matter, the “weighted” voting rule will apply for the decision.

If you have any questions or need any further information please contact Ms. Brittany Johnson at or call 250 387-8741.

Original signed by:


Talitha Soldera, CGA
Director, Local Government Finance


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