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BCUC report casts shadow over Site C future

NDP-ordered review finds Site C dam may actually cost more than $10 billion and that BC Hydro’s projections are unreliable.

Preparatory construction work continues on BC Hydro's Site C dam on the Peace River, near Fort St. John in B.C.'s northeast, shown in these 2016 photos.

Contributed/BC Hydro / Metro Web Upload

Preparatory construction work continues on BC Hydro's Site C dam on the Peace River, near Fort St. John in B.C.'s northeast, shown in these 2016 photos.

“Damned if you do, damned if you don’t.”

That is one economist’s assessment of the options facing the provincial government after the B.C. Utilities Commission released its final report on the Site C dam Wednesday, finding that while the megaproject’s budget could surpass $10 billion, killing it now will mean a loss of up to $4 billion.

The review, ordered by the NDP after it took power, called into question the business case used by BC Hydro and the previous B.C. Liberal government to move ahead with construction of the 1,1000-megawatt dam.

BC Hydro had affirmed earlier this year that, at $8.3 billion, the project was both on time and on budget.

But in addition to finding the Crown corporation had overestimated future power demand in justifying the project, the BCUC report found “the total cost at completion may be in excess of $10.0 billion” and that it “is not persuaded that it will remain on schedule for a November 2024 in-service date.”

Even now, “alternative energy sources such as wind, geothermal and industrial curtailment could provide similar benefits to ratepayers as the Site C project with an equal or lower Unit Energy Cost," the commission said.

On the other hand, terminating the project now will cost another $1.8 billion on top of the nearly $2 billion already spent on Site C and come at the cost of jobs.

That leaves the NDP in a tricky political situation, according to University of British Columbia economist Werner Antweiler.

“The [Liberal government] decision at the time was the wrong decision to favour Site C over the alternatives,” said Antweiler. “Now we’re stuck deciding if we are going to finish this option and pay a further $8 billion or are we going to scrap it? There are repercussions. There are jobs on the line. The problem will be if it is scrapped, that will be $4 billion that will have been for naught.”

While he doesn’t support the project over other renewable energy options, Antweiler said that at this point he would, “Hold my nose and finish the project.”

“But it would certainly not be my first choice,” he said.

Marc Lee, senior economist at the Canadian Centre for Policy Alternatives, however, said the BCUC’s “bombshell” report spells doom for Site C.

“Even though there are all these sunk costs where we’ve already spent a lot of money, I can’t imagine the B.C. government going ahead with the project on the basis of what’s here,” said Lee. “The findings are damning and essentially rejects all of BC Hydro’s core arguments.”

Continuing to funnel money into the projects when cheaper alternatives exist “would be throwing good money after bad,” he argued.

“We’ve already added another $2 billion [to the estimated cost] and other experts in the field are saying it could reach as high as $12 billion,” he said. “So at what point do you pull the plug on this project by that logic?”

The review doesn’t even take into consideration other project-related issues like First Nations rights and title, environmental impacts and the loss of agricultural land, Lee said.

Both Antweiler and Lee were critical of the BC Liberals for pushing through the project in the first place.

“Ultimately, some kind of inquiry is needed to investigate how BC Hydro executives and the previous B.C. government essentially manufactured the case for Site C and then exempted a $10-billion project from B.C. Utilities Commission review,” fumed Lee.

The NDP government has promised to make a decision by the end of the year.

"This will be an extremely difficult decision,” said Minister of Energy, Mines and Petroleum Resources Michelle Mungal in a statement. “We inherited a project that was advanced by the previous government without proper regulatory oversight, is now more than two years into construction, employs more than 2,000 people, and on which about $2 billion has already been spent. We are going to take the time we need to make a decision on Site C that works for B.C. families, businesses and the sustainability of our environment and economy.”

B.C. Liberal MLA Mike Bernier defended his party’s previous decision to green-light the project and urged the current government to stay the course.

“When you look at the costing of Site C, it is something that can last for 100 years. That has to be considered in the final decision-making,” Bernier said. “Do we want to have 100 years of clean renewable power or are we going to write off $4 billion, go back to zero and start over?”

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