The report must have landed on British Columbia Premier John Horgan’s desk with a thud. It was not a welcome Christmas present.
The report in question is an independent assessment of the troubled Site C hydroelectric dam under construction on the Peace River in the province’s northeast. It was scheduled to hit the Premier’s desk in the days before Christmas, and could be made public as soon as this week.
It will be grim. How grim is the question.
Last summer, BC Hydro revealed Site C was in big trouble. A shaky foundation on the river’s right bank threatened the stability of the dam, and costs were spiralling. The $10.7-billion project was already over budget, with about half the money spent. Mr. Horgan ordered an independent review and said halting Site C for good was possible.
“If the science tells us and the economics tells us that it’s the wrong way to proceed, we will take appropriate action,” the Premier said.
If this sort of story sounds familiar – big dam, big promises and big problems – that’s because the saga of Site C has many prequels in the world of hydroelectric megaprojects. Backers exaggerate the benefits and minimize the challenges; then construction starts and predictable surprises pop up like weeds. What started life as a reasonable idea is suddenly twice as expensive – and no longer so reasonable.
In Newfoundland and Labrador, the Muskrat Falls dam is, at $13.1-billion, more than double its original budget. It has pushed the province to the financial brink. Ottawa, which had guaranteed $7.9-billion of project debt, stepped in again in mid-December and deferred $844-million in payments. Full power is finally supposed to flow late next year.
The feds are also aiming to make Muskrat Falls viable – or are they throwing good money after bad? – by backing the so-called Atlantic Loop, a network to carry the electric power to Atlantic Canada.
For B.C., there is still time to turn back at Site C, as difficult and financially gutting a choice as that may be. Killing the project now means $6-billion-plus spent for zero power. But it may make sense, if pushing forward means a final bill at upwards of $15-billion.
There is bipartisan blame for this mess, which is decades in the making. There are two large dams on the Peace River, one completed in 1968 and the second in 1980. They have supplied plentiful and affordable power to the province. The plan had always been for a third dam. In 1967, a spot near the Alberta border, Site E, was seen as the best location. The terrain was firm, but it was rejected because of cost.
Instead, a decade later, the seemingly cheaper but geologically troublesome Site C was chosen.
In the 2000s, building Site C became a priority of the BC Liberals. It was exempted from an independent review and construction started – with a budget of $8.8-billion – in 2015. Former premier Christy Clark promised to get the work beyond the point of no return. In 2017, the NDP formed government. They had opposed Site C but Mr. Horgan decided to push forward. Mike Harcourt, a former NDP premier, in 2017 called Site C a “clear, unmitigated disaster.” And that was when only $2-billion had been spent.
More warnings came behind closed doors, before finally spilling out last summer.
Mr. Horgan’s first big decision as Premier in 2017 was whether to continue construction at Site C. The first big decision of his second term will once again be Site C.
Is the project already so far along that stopping it makes no sense?
In October, the C.D. Howe Institute released an analysis from two hydro experts, which concluded that the case for Site C is “getting weaker.” At $10.7-billion, it is only “marginally economic.” Cancellation, the report said, should be on the table if costs jump. At $15-billion, it makes more sense to shutter Site C, absorb the costs, and invest in wind power and battery storage, the report said. Wind power plus battery storage would also allow for smaller projects, rather than one huge one.
Site C was always a problematic place to build a large dam. Numerous decision makers over the years pushed ahead anyway.
Now, Mr. Horgan has to eyeball the sums and consider the conclusions in that report on his desk – and decide whether prudence means pressing forward, or turning back.
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