BC Hydro’s new CEO Chris O’Riley has written a letter to the B.C. Utilities Commission stating that the crown corporation will not meet the timeline for river diversion for the Site C dam, which will add $610 million to the project’s price tag.
“BC Hydro has encountered some geotechnical and construction challenges on the project and the risk to the river diversion timeline has now materialized,” O’Riley wrote.
“Based on the recent completion of a constructability review and an executive meeting with our Main Civil Works contractor on September 27, 2017, we have now determined that we will not be able to meet the current timeline for river diversion in 2019.”
The letter was in response to questions set out in the BCUC’s preliminary report issued on Sept. 20th.
“Not meeting the current river diversion timeline has created new pressures on the project’s budget. We estimate that this development in the project is expected to increase its cost by 7.3 per cent or $610 million, for a total forecast project cost of $8.945 billion,” reads the letter.
BC Hydro had identified risks to the river diversion timeline in its August 30 filing with the B.C. Utilities Commission. An independent audit by Deloitte also identified the risk.
"BC Hydro are finally being a bit more transparent. It’s what we had expected for some time that this project has been mismanaged," said former BC Hydro CEO Marc Eliesen.
— DeSmog Canada (@DeSmogCanada) October 5, 2017
The Site C dam is the most expensive public project in B.C. history and, if completed, will flood more than 100 kilometres of river valley, destroying farmland and First Nations spiritual sites.
“Today’s filing provides an opportunity for us to share new information with the commission and the public,” O’Riley wrote in his letter. “Like all large, complex projects, Site C faces risks and uncertainties.”
The letter also notes that while the delay will set some activities back a year, there was a one-year float built into the schedule and BC Hydro is “confident we can still deliver this project ton time by November 2024.”
But Eliesen says that’s not a credible claim.
“There’s no way they’re going to meet the 2024 deadline. Keep in mind we’ve only completed two years of a nine-year project. We’ve got seven years to go with all of the problems and challenges and geo-technical issues,” Eliesen told DeSmog Canada.
The BC Hydro letter also notes that “due to the project’s complexity, we expect to continue to face risks in other areas, including our second largest procurement (i.e. the Generating Station and Spillway) that remains open and the highway realignment.”
Eliesen estimates the final price tag on Site C will escalate to $12 billion if the project is not terminated.
“It is following almost the identical track that the other two major hydro projects in Canada — Keeyask in Manitoba and Muskrat Falls — have followed.”
Those two projects have been struck by major cost overruns and delays.
Despite the challenges Site C is facing, the letter states that BC Hydro’s analysis “continues to confirm that completing Site C as planned is still the most cost-effective option for our customers.”
“We remain committed to Site C and are confident in our ability to deliver the project,” the letter reads.
Eliesen finds that conclusion “totally bizarre” and credits the “very good work” of the Deloitte consultants for forcing BC Hydro to admit the project is over budget and behind schedule.
“To try to complete this project at this time is throwing good money at bad,” he said. “All of the evidence that’s coming out from this inquiry is that we don’t need the power.”
DeSmog Canada first reported on June 30, 2016, that the Site C dam was behind schedule and over budget. Documents obtained via Freedom of Information legislation later revealed a co-ordinated attempt by BC Hydro and the Premier's Office to discredit the story.
Image: Site C dam construction June 2016. Photo: Garth Lenz|DeSmog Canada