The Eby government’s fishy explanation for a $1.5-billion gas royalty hole

PENTICTON — The Government of British Columbia has finally admitted its Budget 2026 projection overstated natural gas royalties it told British Columbians to expect by well over $1 billion..The official correction — if you are prepared to accept it, given it is being offered by the same team who made the error in the first place — is about $292 million a year, or nearly $1.5 billion over five years.The premier’s office called it an “administrative error” tied to “unit and currency conversions.” Simon Fraser University economist Nancy Olewiler, who co-authored the last independent review of the royalty system, called that explanation "incomplete and confusing." A Treaty 8 lawyer embedded in the file for five years went further, calling parts of it “absolutely false.”What the government has so far failed to explain is how Energy Minister Adrian Dix could sell a $2.4-billion “windfall” off those same budget numbers in a closed-room meeting on June 29, or how Premier David Eby could tell reporters on August 25 he was “not familiar with any error in the budget related to oil and gas revenues” six weeks after West Moberly Chief Roland Willson says he put the error in the premier’s hand.Vancouver Sun columnist Vaughn Palmer put the timeline on the record Friday..“BC's $1.5B budget hole,” Palmer wrote. “NDP told weeks ago about natural gas revenue error says West Moberly Chief Roland Willson. Treaty 8 nations told Adrian Dix June 29. Willson handed David Eby letter on error July 14. Premier never replied. Eby denied knowledge this week.”.Under the current transitional system, Victoria calculates the monthly royalty cheque using the plant inlet price: the market price of the gas minus the cost of getting it from the well to the processing plant.The royalty is supposed to come off the price at the plant door, after freight and processing are taken out. The budget left those costs in. It is akin to an Uber driver adding up the month’s fares and calling the total take-home pay complete without subtracting the cost of gas.On June 29, in a closed-door meeting with Treaty 8 First Nations, Dix defended the new royalty framework cabinet is aiming to have in force January 1, 2027. The nations’ technical staff told him the budget data were flawed and that new credits inside the framework would undercut the take even further. Two weeks later, on July 14, chiefs of four Treaty 8 First Nations — whose territory covers the Montney fields that produce the gas — hand-delivered a letter to Eby explaining what was effectively the same thing they tried telling Dix..The letter, obtained by Business in Vancouver, said the government “appears to have fundamentally misled” its citizens and its creditors and was “poised to make another massive mistake” with the new framework. “Essentially, your government is stacking mistake upon mistake upon mistake,” it concluded. “This is your last chance to avoid a basic — and embarrassing — mistake that will cost the province billions of dollars.”Willson says Eby never replied.On Tuesday in Vancouver, Eby was again asked about the budget error. “Not familiar with any error in the budget related to oil and gas revenues,” he said. Hours after BIV published its investigation, the Office of the Premier emailed a different story from the one provided by the premier.The Ministry of Energy and Climate Solutions said it had reviewed the file and found an administrative error in the natural gas price forecast. Forecast royalties would drop by an average of $292 million a year over five years according to the ministry, and the mistake would be corrected in the September financial update. “It is incorrect to claim that this was due to a lack of accounting of transportation and safety costs,” the office said. Olewiler’s reply was blunt. The government’s account of the error and the correction was “incomplete and confusing," she said. On the currency conversion explanation, an industry expert granted anonymity by BIV noted that most of the Budget 2026 gas prices were already in Canadian dollars, so a currency conversion could not be the source either.Nechako-Lakes MLA John Rustad put the political question in one line Friday morning..“David Eby’s minister went to Fort St. John on June 29 and sold $2.4 billion more in gas royalties,” Rustad wrote. “Adrian Dix said it on tape, behind closed doors, to Treaty 8. He said the number came from Budget 2026. That number was never real.” He asked the only question the September update has to answer in public: “Was the $2.4 billion ever real?”.The legislature returns October 5.Josie Osborne, had the severe misfortune of inheriting the finance file on August 14. With no professional background in finance or accounting, she is now the minister entrusted with fixing the $1.5 billion error.The September update to Budget 2026 is her first chance. Un-cooking someone else’s books is a hard way to start a new job.

The Eby government’s fishy explanation for a $1.5-billion gas royalty hole

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