BC Hydro – Tax Court of Canada finds that ETA s. 182 did not apply to a payment made in consideration for modifying an agreement to optionally extend its term

BC Hydro, which had entered into an electricity purchase agreement (EPA) with an independent power producer for the supply of electricity at a particular project in BC, agreed with that supplier that the EPA would be amended to provide, inter alia, that in consideration for the payment by BC Hydro of the sum of $8.5 million by the date 30 days after the project became operational, BC Hydro would have the option to extend the term of the EPA by a further 16 years.

BC Hydro submitted that s. 182 applied to the $8.5 million sum as being an amount paid by it as a consequence of the modification of the EPA. In rejecting this submission, Bocock J found that the payment was consideration for the optional term extension and therefore was consideration for a "taxable supply per se." Since the payment was made for such taxable supply, it was not made as a consequence of any modification of the electricity supply agreement (the EPA) as required by s. 182.

Neal Armstrong. Summary of British Columbia Hydro and Power Authority v. The King, 2025 TCC 61 under ETA s. 182(1) and General Concepts – Evidence.