Auditor General Nudges B.C. to Amend Act that Exempted Site C Dam from Independent Review

Remember B.C.’s Clean Energy Act, championed by former Liberal Premier Gordon Campbell to position B.C. as a “world leader” in addressing climate change?

The act exempted hydro undertakings like the Site C dam from independent oversight by the watchdog B.C. Utilities Commission (BCUC), an independent body set up to ensure that projects proposed by the government are in the public interest, and not promoted for partisan political gain.

The act further set the legal stage for building the Site C dam, a pet project of the B.C. Liberals, by closing the door on energy sources such as the Burrard Thermal natural gas-fired plant and the power to which B.C. is entitled under the Columbia River Treaty.

On Thursday, B.C.’s Auditor General Carol Bellringer — the province’s public interest watchdog — issued a report nudging the NDP government to review and amend the Clean Energy Act’s objectives, which the report describes as “too diverse and in many cases contradictory with each other.”

Bellringer also found the act’s objectives are often in contradiction with the utility commission’s mandate.

“There is a risk that exempting the commission from reviewing large projects can undermine public confidence in those projects and in the regulator [the BCUC] itself,” says the report, noting that regulators are set up to provide a “transparent and evidence-based process.”

The report highlights the Site C dam project as a case in point. “Our office has received many requests to examine government’s decision to build the Site C dam, which government initially excluded from the review process,” the report notes.

“Government’s decisions to exclude the commission from overseeing certain BC Hydro projects is inconsistent with one of the original purposes of the commission — to fully regulate BC Hydro.”

Independence of BCUC a concern

In a teleconference Thursday, Bellringer said the government “already knows how it can make the BCUC more effective.”

Bellringer zeroed in on the commission’s independence as one area that needs attention.

“An effective regulator is in the interests of all the residents of British Columbia,” she said.

“Independence means that regulators are able to make objective decisions based on facts. Independence enables regulators to consider the short and long-term interests of ratepayers, regulated companies and the public.”

By excluding the BCUC from key decisions, Bellringer said the government “loses out on the value of an independent transparent review and expert advice.”

In a later telephone interview, Bellringer said her office continues to look into the $10.7 billion Site C dam project.

“We’re still planning to do an audit,” she told DeSmog Canada. “We’re still trying to figure out what aspect to look at. I know there’s quite a bit of pressure on us from all kinds of people who would like us to do that very quickly but as you know it’s a very large project, so not so easy to narrow down.”

The auditor general also said there is “no question” that on-going Site C oversight by the BCUC would “add to the strength” of the independent review it conducted last fall, which found that the project is behind schedule and over-budget, with a final price tag that could exceed $12.5 billion.

“I just don’t have a view on exactly what it would look like.”

“There is a risk that exempting the commission from reviewing large projects can undermine public confidence in those projects and in the regulator itself.” B.C. Auditor General, Carol Bellringer, on the exemption of the Site C dam from BCUC review https://t.co/Vmnij9jLDQ

— DeSmog Canada (@DeSmogCanada) March 16, 2018

Oversight lost with Clean Energy Act

Site C was far from the only energy project that the Clean Energy Act removed from independent BCUC review.

The Northwest Transmission Line, an over-budget project that brought power to remote mining operations, was also stripped of oversight, as were BC Hydro’s smart meters plan and power supply proposals from independent power producers, to which BC Hydro is now paying millions of dollars not to produce power because of an electricity surplus in the province.

The operation of Burrard Thermal, a natural gas-fired generating plant on the north shore of Port Moody in the Lower Mainland, was also removed from BCUC scrutiny.

Built in 1963, the plant was refurbished in the 1990s to become the cleanest standby natural-gas fired plant on the continent. It was capable of generating 950 megawatts of electricity, nearly as much as the Site C dam.

The district of Hudson’s Hope, the municipality hardest hit by the Site C dam, has pointed out that Burrard Thermal could have been refurbished for $1 billion to bring it into compliance with the Clean Energy Act, at a fraction of the cost of the Site C dam project.

The BCUC wanted Burrard Thermal to continue operating, to provide emergency backup power, but the BC Liberals shut down the plant in the spring of 2016.

What Is the Clean Energy Act?

Former Premier Gordon Campbell described the act as a legal chisel that would enable B.C. to chip away at its greenhouse gas emissions and invest in renewable energy.

“We want British Columbia to become a leading North American supplier of clean, reliable, low carbon energy,” the Campbell declared on the day the act was introduced.

Among other changes, the act positioned B.C. to become a bigger exporter of electricity, with the Site C dam as the cornerstone of new energy experts, although there were no committed buyers for the dam’s power.

There is still no confirmed buyer for the Site C’ dam’s electricity, and energy demand in B.C. has been flat for more than ten years even though the population has grown by 17 per cent.

The act also mandated that B.C. must be almost completely self-sufficient in electricity, shutting the window on electricity imports, including from clean energy sources.

It prohibited B.C. from accepting Columbia River electricity generated in the U.S. — about the same amount of power as Site C would produce — even though a provision for claiming that power is included in the Columbia River Treaty.

Although the Site C dam project received an expedited BCUC review last fall, the NDP government did not allow the BCUC to recommend whether or not the project should proceed, as the commission would have done before the Liberals removed its oversight.

Notably, the BCUC review revealed troubling geotechnical issues and on-going problems with Site C’s major contractors, who are suing BC Hydro for more money. It also determined that energy alternatives such as wind and geothermal could provide the same amount of energy at a lower or equal cost.

Bellringer said her office originally intended to conduct an audit of the BCUC to determine if it is exercising effective oversight of BC Hydro and other organizations it regulates, such as ICBC.

But preliminary planning work for the audit determined that many of the same risks to the BCUC’s effectiveness had already been identified in two task force reviews in 2013 and 2014, and that further audit work would not contribute to a better understanding of the issues.

“We felt that those important areas needed to get attention and so we decided to issue this report instead.”