The troubled Site C dam project is poised for more cost overruns and schedule delays despite repeated assurances from B.C.’s NDP government that the project will be delivered on time and within its revised budget of $10.7 billion. 

Details are found in BC Hydro’s unusually frank quarterly report to the B.C. Utilities Commission, filed on Jan. 15, which reveals significant problems with the publicly funded dam amidst the typically positive project updates.

Some of the more serious issues include “significant cost pressures and/or budget increases” since the NDP government approved an additional $2 billion for the project two years ago and a September cost risk analysis showing that the revised Site C dam project budget is already “under pressure.”

An excerpt from BC Hydro’s latest quarterly report to the B.C. Utilities Commission noting the project’s budget is “under pressure.”

18-metre concrete chunk fell from tunnel lining

BC Hydro also acknowledged, for the first time, that a fast-approaching and already revised timeline for completing two critical river diversion tunnels is “at risk,” noting issues with the tunnel liner concrete that include falling pieces of concrete chunks as large as 18 metres by three metres.

If the river diversion tunnels are not finished next month as forecast, the Site C project’s long-promised completion date of 2024 could be delayed by one year, adding further to the project’s escalating cost. 

“I’m not at all surprised by what’s happening,” former BC Hydro CEO Marc Eliesen told The Narwhal. 

“Even given the limited information which is contained in this quarterly report … clearly we’re going to see a project that is upwards of $12 to $13 billion at the end of the day,” said Eliesen, who is also the former chair and CEO of Ontario Hydro, the former chair of Manitoba Hydro and the former chair and CEO of the Manitoba Energy Authority.

“This to me is just shocking and a colossal waste for the ratepayers of the province.”

Construction at the Site C dam on the Peace River in the summer of 2018. Photo: Garth Lenz / The Narwhal

The Site C dam was announced in 2010 as a $6.6 billion project. The cost was bumped up to $7.9 billion prior to the deliberations of a panel that examined the project for the federal and provincial governments and drew its conclusions based on that figure.

The project budget subsequently climbed to $8.8 billion when the former BC Liberal government approved the project in December 2014 — after changing the law to strip the watchdog B.C. Utilities Commission of its responsibility to determine if building the dam was in the public interest. It then jumped to $10.7 billion in December 2017.

The Narwhal first flagged the Site C dam’s rising costs in June 2016, when the project was in the preliminary stages of construction. In response to our article, which was based on BC Hydro’s own reports, BC Hydro issued a press release calling our story “inaccurate.”

That BC Hydro press release, claiming the Site C dam is “on budget and on schedule” at $8.8 billion, is still on its Site C dam website.

‘Unforeseen financial impacts’ disclosed in report

Eliesen and other energy experts have been sounding the alarm for years about what they say is the unacceptable and unnecessary cost of the Site C dam, which would flood 128 kilometres of the Peace River and its tributaries to produce 680 megawatts of power at average capacity — 1,100 megawatts of power if the project reaches peak capacity.

An independent review of the project’s economics in 2018 by the B.C. Utilities Commission found that 1,100 megawatts of power could be produced by a suite of less destructive renewable energy projects, including wind, for $8.8 billion or less. 

Ignoring a warning from the utilities commission that Site C’s cost could exceed $12 billion, the newly elected NDP government moved forward with dam construction in December 2017 with a $2 billion increase in the project’s budget. 

Premier John Horgan subsequently set up a “Site C Project Assurance Board” to ensure the cost would not exceed the newly inflated $10.7 billion price tag and the dam would be fully operational in 2024, as promised by successive governments.

This week’s quarterly report — covering a three-month period up to Sept. 30, 2019 — discloses BC Hydro has spent approximately 63 per cent of the project’s $858 million contingency allowance.

“BC Hydro expects to request a draw on the [$708 million treasury board] project reserve, as and when needed to make future contractual commitments,” the report further notes. 

In the report, BC Hydro says the Site C dam’s revised budget of $10.7 billion “did not contemplate certain unforeseen financial impacts.” 

Those include First Nations treaty infringement claims and an injunction application by West Moberly First Nations, according to the report.

The injunction application, heard in 2018, made an ultimately unsuccessful bid to protect 13 areas of spiritual and cultural significance until the nation’s treaty rights case could be heard.

West Moberly First Nations and Prophet River First Nation have each filed civil actions alleging that the Site C dam and two previous dams on the Peace River constitute an unjustifiable infringement of their treaty rights. 

In a recent decision, the United Nations Committee on the Elimination of Racial Discrimination called on Canada to suspend the Site C project — along with the Coastal GasLink and Trans Mountain pipeline projects — until it receives the “free, prior and informed” consent of Indigenous peoples, in keeping with the UN Declaration on the Rights of Indigenous Peoples that B.C. recently enshrined in law.

The Site C dam would flood Indigenous burial sites and traditional hunting and fishing grounds, poisoning bull trout and other food fish with methylmercury.

‘Maybe financially we’re still not at the point of no return’

Eliesen pointed out that treaty infringement settlements could cost more than $1 billion, noting that Horgan himself has acknowledged their potentially high cost.

“These are things that people knew about in advance and they didn’t want to take them into consideration in cost and schedule because they knew it would scare people away,” Eliesen said. 

“So we have the very same people, whether it’s the people in government or the people in BC Hydro, who have been continuously wrong with regard to cost and schedule.”

BC Hydro also noted the Site C project is experiencing material cost pressures due to contractor delay and other unspecified claims, additional labour resource requirements, worker accommodation expansion and estimated site reclamation costs.

Eliesen said it “doesn’t take a space scientist” to figure out that highly competitive jobs on other major resource projects in B.C. — including the LNG Canada project and Trans Mountain pipeline expansion — will have an impact on the Site C project in terms of labour availability and cost.

“This was to be expected,” he said. “It’s going to impact the cost, there’s no question about that. It’s going to be significant. And that has never been included in the overall estimate and the overall cost.”

Ken Boon, president of the Peace Valley Landowner Association, which represents 70 local landowners impacted by the Site C dam, said it might still be cheaper to cancel the project than for construction to continue. 

“Maybe financially we’re still not at the point of no return,” Boon said in an interview, referring to former B.C. premier Christy Clark’s pledge to ensure the project reached what Clark called “the point of no return.”

Ken Boon stands with his wife, Arlene, in front of hundreds of yellow stakes on the couple’s third-generation family farm. The stakes each represent a $100 dollar donation to First Nations’ legal challenges of the Site C dam project. Photo: Jayce Hawkins / The Narwhal

“What we’re seeing in this quarterly report is what we’ve all feared and what we’ve predicted — that it’s a project just rife with problems. And we’re looking now at cost overruns,” Boon said.

“These megaprojects like dams just continue to skyrocket out of control cost-wise while the clean and green renewables continue to drop in price. This quarterly report just speaks to that happening with the Site C dam.”

Eliesen noted there is “not one word” in the quarterly report about the financial risks to the Site C dam’s construction and operations that are posed by fracking in the Peace Valley area — risks that “BC Hydro’s own safety engineers have attempted over the years to bring to the attention of senior management and the government unsuccessfully.” 

The Peace Canyon dam, 83 kilometres upstream from the Site C dam, is built on weak, unstable rock and officials warn could it fail in an earthquake triggered by a nearby natural gas industry fracking or disposal well operation.*

Other issues cited in the report include safety incidents for workers and a major left bank excavation that is behind schedule due to contractor concerns about slope safety. 

The banks of the Peace River Valley are notoriously unstable. A major landslide last year, very close to the dam site, renewed calls for an independent safety investigation of the project. 

A landslide in late 2018 destroyed a portion of the Old Fort Road, a short distance from the Site C dam project. Photo: Garth Lenz / The Narwhal

The report also highlighted other troubling issues that could affect the project’s schedule and cost. 

Less than one-half of the steel for penstocks had been fabricated by the end of September as planned, according to the report, which said BC Hydro is working with the generating station and spillways contractor to “recover” the schedule. 

The report further noted “instances of resistance” from the contractor responsible for the majority of turbine generator components in providing BC Hydro’s local inspectors access to its São Paulo manufacturing facility for surveillance inspections. BC Hydro said it is addressing the situation through regular meetings with the contractor.

Boon said until he read the report he wasn’t aware of a left bank drainage adit — a horizontal passageway that can be used for drainage — that will cross above the diversion tunnel.

“That just sounds like a recipe for problems,” he said. “What it indicates to me is they’re having water or drainage issues on that north bank. We know the north bank has been an ongoing problem for them with stabilization and water.”

“Obviously if you can’t divert the river you can’t build a dam and they’re having some real problems there.”  

Lack of transparency at Site C

Eliesen said the last time British Columbians received up to date and comprehensive information about project costs, schedule and areas of risk was in the fall of 2017 when the B.C. Utilities Commission reviewed the economics of the project. 

“Now we only get on a quarterly basis, months after, the information that BC Hydro wants released,” he said.  

“There’s no independent analysis. There’s no independent reporting, contrary to what Horgan promised in December [2017]. He said there was going to be an independent quality assessment outside of BC Hydro. That never took place.”

All findings of the Site C Project Assurance board have been kept secret by the B.C. government and BC Hydro. 

Six BC Hydro directors sit on the assurance board, according to court documents. They include John Nunn, who was Site C project’s chief project engineer. Nunn worked for the engineering and consulting firm Klohn Crippen Berger, a Vancouver-based company that holds a current contract, along with SNC-Lavalin, for “design services” on the Site C project.

“So there’s no independent look at what BC Hydro is doing and to advise the ratepayers of what’s been happening,” Eliesen said.

“Even with these quarterly reports, it’s a very secretive project,” Boon said. “As before, the people are kept in the dark other than to read through these quarterly reports and try to glean what they can.”  

Despite the red flags about cost pressures on the Site C dam budget, BC Hydro says in the report, in a carefully worded sentence, that it “continues to manage the project within the approved budget of $10.7 billion.”

In a prominently displayed table assessing the status of the project, BC Hydro assigns a “yellow” status to the categories of cost, schedule, overall project health, litigation and safety — denoting “moderate issues.” According to the table, a green dot indicates a category is on track to meet project targets.

Coloured dots denote risk in BC Hydro’s recent report.

Green dots were assigned for seven out of 12 categories, including for Indigenous relations, the “quality of work” and project permits and authorizations, more than one-quarter of which are still outstanding.

“There are no red dots,” Eliesen noted. “There are yellow dots from their estimation. Maybe if someone independent did it there would be a lot of red dots of major risk.” 

In another carefully worded statement, BC Hydro notes in the report that a new “optimized” schedule to complete the diversion tunnels will still achieve “the key schedule milestones associated with river diversion in fall 2020,” raising questions about whether or not that means the river diversion will go ahead as planned.

In response to questions from The Narwhal, the B.C. energy ministry said the Site C project “remains on schedule for achieving an in-service date of 2024 and BC Hydro continues to manage the project within the $10.7 billion budget.”

The ministry also said BC Hydro is on track for river diversion in 2020, noting the concrete tunnel lining process is, on average, about 50 per cent complete. It also said the lining is nearing completion in one tunnel, hinting that lining in the second tunnel is far from complete.

“The lined tunnels, and related intake and outlet structures at either end, are scheduled to be completed in early 2020 in advance of river diversion,” the ministry said.

The ministry also noted that BC Hydro’s quarterly reports on the Site C project “are reviewed and approved by the Project Assurance Board.”

The ministry did not answer a question about why the project assurance board’s findings are not public.

*Updated Jan. 31 at 12:20 p.m. The following clause was removed: “The Site C dam will be completely dependent on the Peace Canyon dam…” In fact, the Site C dam will be hydrologically dependent on the W.A.C. Bennett dam, about 23 kilometres upstream from the Peace Canyon dam.

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Of all the years of political spin to justify construction of the Site C dam, last week’s media briefing about BC Hydro might get a special place in the hall of fame.

On Thursday, provincial media were invited to the underground theatre at the B.C. Legislature for a “technical briefing” on the first phase of a review of BC Hydro, a public utility so deeply indebted that it’s been flirting with bankruptcy.

For the next 30 minutes or so, media were treated to a shock and awe presentation with a barrage of slides, graphs, numbers and various claims about B.C.’s energy demand and the price of different renewables.

It all bolstered the NDP government’s messaging, rolled out the previous evening in an exclusive story placed in the Vancouver Sun, that contracts the previous Liberal government signed with independent power producers have led to staggering losses for BC Hydro and that the Liberals had manufactured a need for new power.

“The reason Site C is something we are going to need in the future is because it’s firm power,” B.C. Energy Minister Michelle Mungall nevertheless told the Sun in an interview that accompanied the story about the government’s report on independent power projects (IPPs), titled Zapped.

The IPP contracts, Mungall informed media after the technical briefing, were a “sweetheart deal for some” but not a good deal for British Columbians who had “overpaid billions of dollars for power.”

How ironic then, that the NDP government opted for a sweetheart deal for itself when it announced just over a year ago that construction of the Site C dam would continue.

It punted the question of how to pay for the project’s unsightly $10.7 billion tab to a future government, passing the buck to generations of future hydro customers while appeasing its construction trades union donors that had lobbied relentlessly for construction to proceed.

The result is that the NDP is now doing precisely what its report justifiably criticizes the Liberals for doing with IPPs — manufacturing a need for Site C’s power while saddling generations of British Columbians with a project which will produce energy that cannot be sold for even close to the price it will cost to produce it.

Construction on the Site C dam in the summer of 2018. Photo: Garth Lenz / The Narwhal

In January, the conservative C.D. Howe Institute issued a report outlining why Site C — along with the Keeyask dam in Manitoba — is “uneconomical” and should be terminated immediately.

“For projects like Site C and Keeyask, it is not too late to cancel,” said the report, Dammed If You Do: How Sunk Costs Are Dragging Canadian Electricity Ratepayers Underwater.

“The sooner provinces face reality and begin negotiating reasonable cancellation programs, the better off ratepayers will be.”

But now the NDP is recharging efforts to convince British Columbians that Site C’s power is needed and that the troubled project is a bargain, even though the dam’s cost has soared by more than $4 billion since it was announced in 2010 and, according to an independent review, could exceed $12.5 billion.

In 2017, the independent B.C. Utilities Commission concluded that a renewables portfolio, including wind and geothermal, could supply the equivalent power of Site C for $8.8 billion or less, calling BC Hydro’s energy forecasts “excessively optimistic.”

Those forecasts have been wrong for years, according to the Commercial Energy Consumers Association, which represents the province’s commercial sector and business interests. Power demand in the province has been stagnant since 2005, despite a growing population.

To fortify its case for the Site C dam, the NDP government mysteriously dropped the price of Site C power at the technical briefing, thus casting the project in a favourable light compared to other renewables, including independent power projects that could be a good deal for British Columbians.

Instead of costing $83 per megawatt hour, as BC Hydro stated when the Site C dam cost $2 billion less than it does now, Site C’s energy can now supposedly be produced for just $62 per megawatt hour, according to the technical briefing.

Wind power, on the other hand, costs between $70 to $105 per megawatt hour to produce in B.C., journalists were informed — which is odd indeed, because the Alberta government recently bought wind power for $37 per megawatt hour and wind power with storage is selling in the U.S. for US$21 per megawatt hour.

When asked about the discrepancy, the senior civil servants — who can’t be named, according to the rules of the technical briefing — said it was because B.C.’s mountainous terrain makes wind power much more expensive than in other jurisdictions.

Tell that to the Canadian Wind Energy Association, which pulled out of B.C. in 2016 as the Site C dam proceeded. Tell that to Northland Power, which recently constructed the North Sea’s largest offshore wind farm but, as Site C continued, withdrew from two proposed wind projects in B.C., one near Prince George and the other near Summerland, that had the combined capacity to produce half as much power as Site C.

And tell that to First Nations all over B.C. who are eager to join the global renewables revolution but who were shut out by the decision to proceed with the Site C dam — First Nations that had already invested in plans for clean energy projects were told last week that BC Hydro’s standing offer program was not just on hold but cancelled, because B.C. doesn’t need one more watt of power.

And then there’s solar energy. Solar just isn’t a good option for B.C., according to the senior bureaucrats at the technical briefing.

Yet the United Kingdom, not known for excessively sunny weather, has installed enough solar capacity to generate more than twice the amount of Site C’s energy.

A provincial government study found that northeast B.C., where the Site C dam will be built on the Peace River, is ideal for solar. Witness the town of Hudson’s Hope in the district that will be most severely affected by the Site C dam, which recently installed B.C.’s largest municipal solar array and will save an estimated $70,000 a year on its hydro bills as a result.

Curious, too, that BC Hydro recently changed the rules for people who install solar at their own expense.

Unlike other utilities, BC Hydro no longer wants to buy extra power from new solar installations — power the utility has purchased for about $100 per megawatt hour. Granted, those purchases alone don’t add up to anywhere near as much power as Site C would produce, but the price is a steal of a deal compared to Site C’s power, which experts like Eoin Finn, a former partner with the global accounting firm KPMG, peg at $120 or more per megawatt hour.

And let’s not forget that BC Hydro backed away from its energy conservation programs as Site C moved forward — programs that, according to BC Hydro’s former CEO and president, had saved about as much power as Site C will produce.

All the more puzzling, B.C. refuses to follow other jurisdictions and introduce time-of-use tariffs, which would further reduce energy demand.

As for Mungall’s claim that B.C. needs Site C because it is “firm” power, readily available any time, the vast majority of B.C.’s energy currently comes from non-run of river hydro.

That means we already have oodles of firm power, including from the W.A.C. Bennett dam, where water flows into the Peace River have been held back for several years for Site C construction — with the only harm done not to energy supply during cold snaps and heat waves but to Wood Buffalo National Park.

There’s also the “firm” Columbia River power, even more power than Site C would produce, that B.C. sells to the United States. The price the U.S. pays for that power? About $30 per megawatt hour.

But U.S. president Donald Trump thinks $30 per megawatt hour is far too high a cost, and his government has re-opened Columbia River Treaty negotiations in an effort to reduce it.

BC Hydro also has the option of using existing assets like the sixth generating unit at the Revelstoke Generating Station (Revelstoke 6) for additional firm power, if indeed it is ever needed.

Just over a year ago, B.C.’s NDP government said a taxpayer bailout of Site C’s $2 billion in sunk costs would result in “massive cuts to services” on which British Columbians depend (a claim that was immediately slammed by project financing experts and later revealed by The Narwhal to be something of a sham).

Yet on Thursday, the government announced a BC Hydro bailout of $1.1 billion with — wait for it  — no cuts to services.

An eight per cent rate hike over five years is now on offer from the NDP — provided the utilities commission accepts the government’s suggestion that eight per cent is sufficient to cover BC Hydro’s rising costs, let alone to start paying down Hydro’s remaining $4.4 billion debt.

Nor has the NDP ruled out another bailout for BC Hydro.

None of those initiatives, however, will pay for the Site C dam, the astronomical bill for which will only start to come due in approximately five years when the power comes on-line.

The C.D. Howe report takes aim at the NDP government’s assertion that it has no choice but to continue building the Site C dam due to the amount of money that had already been spent.

“Policymakers often justify proceeding with uneconomic projects due to the significant amount of money that has already been spent,” the report’s authors note, a phenomenon known as the “sunk cost fallacy.”

“However, the decision about whether to proceed with a project should be determined by the yet-to-be-spent costs, instead of costs already spent.”

The authors recommend that B.C. and Manitoba consider hiring skilled negotiators to “review all existing contracts and develop a pathway toward minimizing cancellation costs, identifying ways to recover value and exploring means of appropriately compensating key stakeholders such as First Nations.”

Even now, a combination of energy sources such as wind and natural gas, including projects with storage capacity “procured in smaller sizes closer to the period of demonstrated need, would be more cost-effective” than the Site C dam, the report concludes.

In Manitoba, an inquiry is now underway to determine why work continued on the hugely over-budget Keeyask dam even though its energy wasn’t needed. Ironically, that inquiry is being led by former B.C. premier Gordon Campbell, who was so determined to build the Site C dam that his government changed the law to remove the B.C. Utilities Commission from determining if the project was in the financial interests of British Columbians.

Likewise, in Newfoundland, a $37.5 million public inquiry is underway into the boondoggle Muskrat Falls dam on Labrador’s Churchill River. Residents of Newfoundland and Labrador can go online to determine how much their hydro bills will rise because of the ill-sighted dam, with an average $1,800 a year per household reported.

Why did the Crown corporation Nalcor continue building the Muskrat Falls dam, and why did the provincial government let it? Where was the oversight and where were the missed opportunities to stop the project before it was too late? Who manufactured the need for Muskrat Falls energy, and why? What other energy options were available if the need arose? Who knew what, and when?

Those are just some of the questions the inquiry is probing — the same questions that no doubt will be asked one day at the inevitable, and much anticipated, Site C dam inquiry in B.C.

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Peace River Valley farmers Ken and Arlene Boon were at a lookout on a neighbour’s property on Sunday when they spotted a fresh landslide at the Site C dam construction site.

Arlene snapped some photos of the latest geotechnical issue to dog the troubled project and posted one on Facebook, with the caption: “just more of the north hill sliding down to the bottom.”

Given that the slide is on the same hill where recent attempts to stabilize the riverbank are encroaching on infrastructure for the $470 million Site C dam workers’ camp, including its water line and parking lot, the couple was not surprised to see the latest slump.

But they are astounded that the NDP government is keeping the public in the dark when it comes to details about geotechnical problems, rising contract costs and other major issues plaguing the largest publicly funded infrastructure project in B.C.’s history.

“It seems that under the NDP there’s a bigger cloak of silence,” Ken Boon, president of the Peace Valley Landowner Association, told DeSmog Canada.

“They’re just going to sit on all this bad news. It’s out of sight and out of mind.”

A landslide at the SIte C construction site, April 15, 2018. Photo: Arlene Boon

No public access to detailed Site C information

As soon as the B.C. Utilities Commission completed a fast-tracked review of the Site C project last November, the door slammed shut on public access to detailed information about the $10.7 billion project on the Peace River in northeast B.C.

Normally, the independent utilities commission — acting in the public interest — would provide ongoing oversight during project construction.

But the former BC Liberal government changed the law to remove the BCUC from scrutinizing the Site C dam, which the commission had previously rejected as an energy option.

Instead of fully restoring the commission’s watchdog role, the NDP government announced in December that it would create a new Site C “Project Assurance Board” as part of a turnaround plan to contain escalating project costs.

The new board has been meeting since January, even though its composition has not been finalized, according to an email from the B.C. energy ministry.

Yet the public has heard nothing about the board’s findings, even though a major Site C contract — to build the project’s generating station and spillways — was recently awarded for $350 million more than documents (accidentally released last fall) revealed that BC Hydro had budgeted.

Marc Eliesen, the former CEO of BC Hydro, Ontario Hydro and the Manitoba Energy Authority, pointed out it has been nearly half a year since the NDP government announced it would set up the new board, and that no information has been forthcoming about the apparent cost overrun on the major contract for the generating station and spillways.

“To me this further confirms that there is no independent overview and that BC Hydro continues to run the show,” Eliesen told DeSmog Canada.

BC Hydro directors will help oversee Site C project

According to the email from the energy ministry, BC Hydro directors and government representatives will sit on the project assurance board, meaning that it is not an independent body.

The composition of the board is being finalized by BC Hydro and the government, and members will be announced “in the coming weeks,” the ministry said.

“We are taking the time to conduct a broad search to find highly-qualified, independent external advisors with expertise in engineering, construction and management of large, complex infrastructure projects to join BC Hydro directors and representatives from government on the new Project Assurance Board,” the email said.

“Finding the kind of specialized skills, experience and independence from BC Hydro that we are looking for in the independent advisors is taking some time, especially considering the size and complexity of Site C and the long-term commitment required for a project that wont be completed until 2024.”

Both Eliesen and David Vardy, the former chair and CEO of Newfoundland’s public utilities board, said they have never heard of a provincial government creating a “whole new body” to oversee a major energy project like Site C.

“I think that the BCUC should be doing this oversight,” Vardy said in an interview.

“The logical thing to me seems to be to use an existing board that has a similar kind of mandate. The BCUC is concerned with rates and the reliability of power. Why wouldn’t they be the best people to exercise this oversight and particularly to ensure quality control?”

Eliesen said the BCUC showed through the Site C inquiry that it has both “the knowledge and expertise to undertake such a ongoing review.”

“The facts clearly reflect that both the government and BC Hydro do not want that monitoring by the independent commission.”

Meanwhile, in Labrador and Manitoba…

In Newfoundland and Labrador, a $37.5 million Commission of Inquiry is underway — including a forensic audit — to determine where things went sideways with the hugely over-budget Muskrat Falls dam, whose $12.7 billion price tag will add $1,800 a year to the annual hydro bills of every household in the province.

Vardy said while the commission can pinpoint what went wrong and make recommendations, it can’t address what he calls the “democratic deficit.”

“Which is what happened in our governance system that allowed us to go down this road without correction,” Vardy said in an interview.

In Manitoba, where the over-budget Keeyask dam is also causing hydro rates to soar, the former head of the province’s Public Utilities Board is among those calling for a forensic audit to examine why things went so wrong.

Graham Lane, who chaired the utilities board from 2004 to 2012, said the situation in Manitoba is so dire that he and others are calling for an immediate halt to construction of the Keeyask dam, even though up to $4.5 billion in sunk costs have been incurred.

That compares to about $2 billion in sunk costs for Site C.

“This story isn’t going to end very well,” Lane, a retired chartered accountant, said in an interview. “It’s never too late to stop.”

Manitoba hydro customers now face compounding eight per cent rate increases each year for six years in a row as a result of over-spending on the Keeyask dam and related transmission lines.

In a paper Lane wrote last month, for an inquiry into the Keeyask dam fiasco launched by an independent MLA, he pointed out that knowledgeable observers saw the “slow-motion disaster” coming more than a decade ago.

“Hard questions need to be asked about governance, political oversight, the influence of engineering contractors, the competence of executive managers, the advice provided by consultants, and the role of labour unions in this train wreck,” Lane wrote.

“Special attention also needs to be placed on the lack of action by the Premier, his cabinet and advisors to grasp the immensity of the problem and take appropriate actions.”

There are many similarities between the Muskrat Falls, Keeyask and Site C dams, Lane told DeSmog Canada.

He said politicians in Manitoba “put blinders on and just kept going.”

“No-one knew how to stop. You could see what was happening. You could see the losses building.”

Lack of independent scrutiny of Site C ‘mind-boggling’

Asked if the findings of the Site C Project Assurance Board will be made public, the energy ministry replied that “progress” on the Site C dam will continue to be documented in quarterly reports to the BCUC available on BC Hydro’s Site C website.

Yet the hamstrung BCUC lacks the muscle to question basic information contained in the reports, much less to dig into issues like why the approved design for Site C’s generating station and spillways recently underwent an overhaul so significant BC Hydro must request an amendment to the project’s environmental assessment certificate, a process that will take months.

The BCUC also has no authority to ask questions about why the latest Site C quarterly report states that in October BC Hydro engaged the consulting firm Ernst and Young to “provide independent oversight to the Project Assurance Board for the Site C Project going forward.”

The BCUC did not submit its final report on Site C until November 1 and the NDP government did not announce its final decision about the project until December.

The latest report, which covers the period to the end of December, also says the Site C dam will provide energy for “more than 100 years,” contradicting earlier government statements that the project will generate 70 years of power.

The report goes on to list major Site C project organizational changes, including an array of new director positions, noting that the “scale and complexity of operations” has increased” and also that project oversight has been centralized.

Eliesen called the lack of independent scrutiny of Site C dam construction, including of the quarterly reports filed with the BCUC, “mind-boggling.”

A spokesperson for the Peace River Hydro Partners, the international consortium that holds Site C’s largest civil works contract, referred questions about the landslide captured on camera by the Boons to BC Hydro.

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Opportunities provided by 21st century renewables, such as geothermal, wind and solar, have either been ignored or the costs over-inflated in BC Hydro documents justifying construction of the Site C dam, the B.C. Utilities Commission Site C Panel was told by presenters during two days of technical briefings.

Speaker after speaker pinpointed holes and inaccuracies in BC Hydro’s math, claiming the bottom line was skewed in favour of building the $8.8-billion dollar dam on the Peace River.

Geothermal power projects are thriving in Oregon and Idaho and the geology does not instantly change at the B.C. border, said Alison Thompson, chair of the Canadian Geothermal Energy Association (CanGEA), pointing to the number of hot springs and drilled natural gas wells in the province, which indicate the presence of geothermal resources.

“So, how much has BC Hydro spent in the last 15 years in exploratory drilling for geothermal resources?” she asked.

“We believe this number to be zero.”

BC Hydro has said none of the calls for independent power projects produced viable geothermal proposals.

ICYMI: Canada Has Enormous Geothermal Potential. Why Aren’t We Using it?

“This perplexes us when we hear in a submission that the exploration to date has not identified any viable geothermal resources. We refute that and think that there is, in fact, remarkable potential for geothermal development in our province.”

CanGEA mapping indicates there are about 5,000 megawatts of geothermal in B.C., and, if time and money was put into exploration, there could be more, Thompson said. The Site C dam is projected to have about a fifth of that capacity, at 1,100 megawatts.

Thompson questioned Geoscience B.C. figures that formed the basis of BC Hydro’s cost estimates, and said she “absolutely refutes the numbers that they were coming up with for exploration.”

Geoscience B.C. used out-dated technology, looking at large diameter wells, instead of more cost effective slim wells used in modern exploration. Doing so bumps up the estimated cost of a 2.5 kilometre well to $12-million, when the cost of a slim well would be $2-million to $4-million, according to Thompson, who also predicted that, based on U.S. figures, 660 megawatts of geothermal would result in 1,122 permanent jobs ­— about 15 times more than Site C would provide.

#Geothermal Would Create 15 Times More Permanent Jobs Than Site #C, Panel Told As BCUC Hearings Complete https://t.co/EOve99S3jC #bcpoli

— DeSmog Canada (@DeSmogCanada) October 17, 2017

BC Hydro ‘Biased The Analysis’ With Skewed Assumptions: Energy Expert

The story was similar when John Dalton, president of the energy management consulting firm Power Advisory LLC, spoke on behalf of the Canadian Wind Energy Association and Clean Energy Association of B.C., and pointed to BC Hydro’s habit of over-estimating demand for electricity — against a backdrop of a decline in energy consumption across North America — while simultaneously over-estimating the cost of alternative power.

“BC Hydro has employed a series of assumptions which have biased the analysis results against alternatives to Site C,” Dalton told the panel. “Collectively the effect of these biases is to ensure that alternative portfolios offer a cost that is significantly higher than Site C.”

BC Hydro considered only wind and pumped storage as possible alternative power sources and failed to consider geothermal, solar, biomass and battery storage, Dalton said.

ICYMI: Falling Costs of Renewable Power Make Site C Dam Obsolete, Says Energy Economist

And the estimated cost of integrating wind power was wrong, Dalton told the panel, adding that BC Hydro does not appear to have done any analysis of integration possibilities.

“BC Hydro adds a $5-megawatt hour wind integration cost, while also including $48-megawatt hour for pumped storage, which can assist with integration. Considering both costs is double counting,” he said.

BC Hydro’s accounting came under further scrutiny from energy consultant Robert McCullough, speaking for the Peace Valley Landowner Association and Peace Valley Environment Association.

ICYMI: Terminating Site C Dam, Building Alternatives Could Save B.C. Over $1B: Economist

“If we believe that British Columbia cannot build a wind farm for the same price that Governor Inslee in Washington can, there’s something wrong — with the same culture, the same level of expertise, the same workers, the same terrain,” he said.

Marc Eliesen, former CEO of BC Hydro, focused on BC Hydro’s mismanagement of the project, with cost overruns already on the horizon.

In August, BC Hydro president Chris O’Riley told the commission that Site C was on time and on budget, but, earlier this month, the story changed. Geotechnical and construction problems and a year’s delay in the river diversion, will mean an additional $610 million on the bill, he said.

“BC Hydro’s current and continued project mismanagement can only lead to a conclusion that the project will reach $12 billion before it is complete,” Eliesen said.

“BC Hydro’s efforts to reach a point of no return for this project have added costs to the project which have not yet been properly identified or calculated and would not have been incurred if BC Hydro had been working toward the publicly announced plan.”

However, O’Riley, one of a team of BC Hydro spokesmen at the technical briefings, said Site C offers the best deal for British Columbians and, if the project is terminated, ratepayers will pay $3.2 billion, with nothing to show for it.

The BCUC panel will make a recommendation to government on the future of Site C on Nov. 1 and it will then be up to cabinet to make a decision.

Image: geothermal. Photo: National Renewable Energy Lab via Flickr

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The controversial $9 billion Site C dam project will be sent for immediate review with the B.C. Utilities Commission if NDP Leader John Horgan becomes B.C.’s premier, according to a landmark agreement between the NDP and Greens.

The agreement outlines the terms of a power-sharing agreement as well as a path forward on key election issues, including the future of the Site C dam.

The agreement sets out a requirement to “immediately refer the Site C construction project to the B.C. Utilities Commission” to investigate the economic viability and consequences of the project for British Columbians.

During the election campaign the Greens vowed to stop the Site C project outright while the NDP committed to send the project for independent review by the B.C. Utilities Commission, a body designed to regulate BC Hydro and electricity rates. The B.C. Liberals exempted Site C from utilities commission scrutiny.

At a joint press conference Tuesday, Green Party Leader Andrew Weaver said he and his two fellow Green MLAs negotiated strongly with the NDP caucus on the fate of the Site C project.

“We came in there very strong on Site C,” Weaver said. “We did not take this lightly.”

The Greens pressured the soon-to-be government on the exact terms of their commitment to send the project for review, Weaver said.

“We got a response that frankly was the right response we were looking for.”

Premier Christy Clark, now facing an inevitable loss of confidence in the house, vowed to push the Site C project “past the point of no return” before the election.

In response to questions, Horgan said Site C construction will not be paused while the commission evaluates the project.

Weaver noted that although construction has not been stopped families facing eviction by B.C. Hydro have been granted an extension of time on their land.

“The Boons have not been evicted from their property,” Weaver said, referring to Ken and Arlene Boon, farmers leading the fight against Site C who were facing eviction at the end of May.

Horgan said his party’s plan for the Site C dam, which requires considering lower cost options for the public, paved the way for the historic NDP-Green power-sharing agreement.

“The draft document we shared with Andrew and his team, that was I think, the foundation for what allowed us to work forward together.”

The Site C dam is the most expensive public infrastructure project in B.C.’s history. The reservoir created by the dam will flood 107 kilometres of the Peace River, destroying thousands of hectares of prized agricultural land and unique ecosystems. It has been under construction for nearly two years in what is an eight-year construction timeline.

The Site C dam is the most environmentally destructive project ever considered under the federal Canadian Environmental Assessment Act, as detailed by the federal-provincial panel tasked with reviewing the project in 2013.

That panel, chaired by Harry Swain, did not make a recommendation for or against the project because the province had failed to both investigate alternatives, such as geothermal, and to demonstrate the need for the power Site C will generate.

In a previous interview with DeSmog Canada, Swain said, “there is no need for Site C.”

“If there was a need, we could meet it with a variety of other renewable and smaller scale sources.”

The panel called on B.C. to send the project to the B.C. Utilities Commission, but the province ignored that recommendation and decided to forge ahead with the project.

Image: Green Party Leader Andrew Weaver and NDP Leader John Horgan release a joint Supply and Confidence Agreement that calls for an immediate review of the Site C project, May 30, 2017. Photo: BC NDP via Flickr

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In an exclusive interview with DeSmog Canada, former BC Hydro CEO Marc Eliesen says ratepayers will face a “devastating” increase in their electricity bills if the Site C dam is built and emphasizes there is no rush to build new sources of power generation in B.C.

“With Site C, BC Hydro ratepayers will be facing a devastating increase of anywhere between 30 and 40 per cent over the next three years,” Eliesen told DeSmog Canada in his first interview on the subject.

“There’s no rush. There’s no immediate need for Site C or any other alternative energy,” he said.

Eliesen’s comment about the lack of immediate need for the power echoes statements made by Harry Swain, the chair of the panel that reviewed the Site C hydro dam for the provincial and federal governments. In March, Swain told DeSmog Canada the B.C. government should have held off on making a decision on the dam.

With a price tag of $8.8 billion, the 1,100-megawatt Site C dam is the most expensive public project in B.C. history. The hydro dam, which would impact 13,000 hectares of agricultural land, has been proposed for the Peace River for three decades.

In late 2014, the provincial and federal governments approved the project and this July construction permits were issued despite pending court challenges by First Nations.

Eliesen, an economist by training, has also served as chairman and CEO of Ontario Hydro, chairman of Manitoba Hydro and has held senior roles with the federal government and the governments of Ontario and Manitoba. In November, Eliesen called the National Energy Board’s review process for the Kinder Morgan Trans Mountain pipeline “fraudulent” and a “public deception” as he dropped out of the process.

Failure to Consider Columbia River Power ‘Non-Sensical’

Eliesen said there is no rush to build new generating capacity in B.C., leaving “more than sufficient time to evaluate alternatives” that are more cost effective and minimize environmental impacts.

The alternatives include everything from geothermal to BC Hydro’s Burrard Thermal plant — due to be decommissioned in 2016 — to the 1,100 megawatts of electricity B.C. has access to through the Columbia River Treaty, Eliesen said.

Not considering using the Columbia River power to meet B.C.’s needs is “non-sensical,” Eliesen said.  (See: The Forgotten Electricity that Could Eliminate Need for Site C Dam)

“If there is a demand for the power, well you clearly have an available supply, which you can depend on,” he said.

“If there was some massive escalation in demand that you needed immediately, well my goodness, you’ve got two instant sources: there’s 1,100 megawatts from the Columbia River and almost another 1,000 from the Burrard Thermal Plant, which was converted from coal to natural gas some time ago.”

Mining, LNG Companies Not Paying ‘Fair Share’

Eliesen also critiqued BC Hydro for adopting a price structure that results in everyday British Columbians subsidizing heavy power users.

“Whether it’s mining or proposed LNG plants or anything of that nature …  They’re all subsidized by other hydro ratepayers. Those heavy power users do not pay the true cost,” Eliesen said. “They are not paying their fair share.”

The B.C. Utilities Commission used to review the cost of service, but that doesn’t take place any more, Eliesen said.

“The provincial government basically declared we don’t want the commission — we don’t want anyone — looking at BC Hydro plans. I think the result has been quite devastating.”

The B.C. government exempted the Site C dam from a review by the B.C. Utilities Commission, despite calls from its own expert panel to refer the project for an independent review of costs and need. The province’s failure to consider the panel’s recommendations has since become the basis for the Peace Valley Landowners Association court challenge against the Site C dam.

Eliesen noted other jurisdictions are conducting much more thorough analyses of hydro projects, noting two projects in Manitoba he recently advised on. 

“They went through the most detailed evaluation by the Manitoba Public Utilities Board that ever could have taken place,” Eliesen said. “The kind of analysis and investigation and due diligence that was taken has never taken place recently in British Columbia.”

Site C Dam Price Tag Likely to Escalate

In 1993, when Eliesen was the president and CEO of BC Hydro, he issued a public statement on behalf of the board stating that Site C would never be built because of its significant negative environmental, economic and social impacts.

That position quietly went by the wayside when the Gordon Campbell government was elected, Eliesen said, noting that electricity costs have increased at a far quicker rates than other jurisdictions since then.

Over the years, Eliesen has seen the cost of the Site C dam nearly double. 

“I’ve seen the costs of Site C escalate enormously,” he says. “It used to be $5, $6 billion, then it was $7.9, now it’s $8.8 billion. It’ll easily reach, if it’s ever built, in the $11 to $12 billion dollar range.”

Eliesen says the costs of Site C haven’t been adequately reviewed and there are “too many conflicting interests in BC Hydro for it to undertake its own due diligence on this matter.”

Calls for a moratorium on construction on Site C have gained strength recently with the Greater Vancouver Regional District and Peace River Regional District both calling on Premier Christy Clark to pause the project while active court cases are completed

On July 23, the B.C. Government and Service Employees’ Union announced its opposition to the Site C dam due to its violation of indigenous rights and the massive loss of habitat and agricultural lands.

Site C Dam ‘Doesn’t Make Any Sense’

Despite the growing calls for a moratorium, the B.C. government appears hell-bent on pushing ahead with building the dam.

Asked why the government continues to push ahead, Eliesen said it doesn’t make any sense.

“Well I can’t talk for the government, so I don’t know, other than they want some major project undertaken during their current election term,” he said.

“It doesn’t make sense in the context of environment, it doesn’t make sense in the context of wanting to work with First Nations and it doesn’t make sense, more specifically, on the economic impact because the B.C. ratepayer will pay enormously over the next three years.”

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Authorizations allowing construction to begin immediately on the Site C dam on the Peace River in northeastern B.C. were issued on Tuesday by B.C.’s Ministry of Forests, Lands and Natural Resource Operations — despite a pending legal challenge by the Treaty 8 First Nations.

This Saturday, hundreds of people in canoes and kayaks will paddle down the Peace River to protest the imminent construction of the dam and flooding of the river.

The $8.8 billion Site C dam — the most expensive public project in B.C. history — was approved by the B.C. government in December. If built, the dam will flood more than 100 kilometres of the Peace River and its tributaries, drowning agricultural land that experts say could produce fruit and vegetables for one million people.

Since the government’s decision to move forward with the project, expert voices have come out of the woodwork to speak out against the project.

Last week, the Greater Vancouver Regional District Board, representing 23 local governments and 2.5 million people, voted to ask Premier Christy Clark for a two-year moratorium on Site C. The board joins more than 30 other B.C. municipalities calling for a moratorium on the project.

“This permitting decision shows the provincial government’s disdain for B.C. ratepayers,” said Rob Botterell,  general counsel to the Peace Valley Landowner Association.  “BC Hydro’s own analysis shows that a two-year delay will save B.C. ratepayers about $200 million.  Who benefits from the urgency to construct Site C? Certainly not those of us paying the tab."

Dam Construction Will 'Indefinitely Scar' B.C.'s Relationship with First Nations

The First Nations Leadership Council recently said moving forward with the dam before the Treaty 8 legal challenge has been heard on July 20th will “indefinitely scar” B.C.’s relationship with First Nations.

This spring, energy economist Robert McCullough said that BC Hydro has dramatically underestimated the cost of producing power from Site C and that far cheaper energy alternatives are available.

Harry Swain, chair of the panel that examined Site C for the federal and provincial governments, has called the failure of the B.C. government to investigate alternatives to the dam a “dereliction of duty.” His criticism of the B.C. government's actions was called “unprecedented” by environmental law experts.

The cost of renewable alternatives have plummeted in cost in recent years and Site C’s business case assumptions are two to five years out of date. The Canadian Geothermal Energy Association says geothermal can meet all of B.C.'s future energy needs at a lower cost than Site C with fewer environmental impacts.

Despite growing opposition from experts, BC Hydro released polling on Tuesday indicating that support for the dam has increased amongst British Columbians.

The Abacus Data poll shows 59 per cent of those polled support building the Site C dam, while 22 per cent support the dam under certain circumstances. Seventeen per cent are opposed. Province-wide awareness of the Site C dam has increased significantly: 75 per cent of British Columbians surveyed are aware of Site C now, compared to 41 per cent in 2013.

The B.C. government says Site C will provide approximately 10,000 direct jobs during construction and will generate enough electricity to power about 450,000 homes per year.

However, the panel that reviewed BC Hydro’s application to build the dam found demand for the power had not been proven on the timeline provided and called for an independent review of costs by the B.C. Utilities Commission — a call the B.C. government has ignored.

Early indications are that some of Site C’s power will be used to power natural gas operations in northeast B.C. For at least the first four years, demand for the power will be insufficient so a portion will be exported at a projected loss of $800 million.

Photo: This section of the Peace River will be flooded if the Site C dam is built.

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Revelations from DeSmog Canada’s exclusive sit-down interview with Harry Swain, the chair of the panel that reviewed the $8.8 billion Site C dam, were raised during question period in the B.C. legislature on Thursday.

Andrew Weaver, Oak Bay-Gordon Head MLA and Deputy Leader of the B.C. Green Party, asked the government about the economics of the Site C dam project in light of Swain’s unprecedented interview.

Swain, a former Deputy Minister of Industry Canada and Indian and Northern Affairs Canada, is thought to be the first review panel member in Canadian history to speak out about a project in this manner. His comments to DeSmog Canada prompted follow-up by the Globe and Mail, CBC, CKNW and CFAX.

“Mr. Swain was very clear that the government was rushed in approving Site C, and British Columbians will pay for their haste,” Weaver said during question period. “As Mr. Swain said: ‘Wisdom would have been waiting for two, three, four years to see whether the projections they’ — that’s BC Hydro — ‘were making had any basis in fact.’ That’s not exactly a glowing endorsement for the fiscal underpinning of Site C.”

The panel that reviewed Site C predicted that the dam will lose $800 million in its first four years of production while it sells excess power for a third of its cost on the export market.

“My goodness, we could use that money to build a state-of-the-art sewage system in Victoria,” Weaver quipped.

Weaver continued during question period:

“Mr. Swain is only the most recent person to suggest waiting a few years to see if electricity demand for the project materializes. We could still build Site C down the road if necessary, but we could use the additional time to properly explore cheaper alternatives like our vast geothermal potential in B.C. We have the time. LNG final investment decisions are delayed or not happening at all or somewhere down the yellow brick road or perhaps in never-never land.”

Weaver asked Bill Bennett, the Minister of Energy and Mines: “Given the massive costs associated with rushing into Site C, will he hit the pause button on construction for two to four years, as recommended by Mr. Swain, and use the time to save British Columbians money and explore viable alternatives?"

Bennett responded saying, “I categorically disagree with the premise of the question” and then went on to say: “Fair enough questions about the need for the electricity, the cost of the project. These are all legitimate issues that we should be debating in this House.”

Bennett then quoted several excerpts from the panel’s report, including that Site C “would be the least expensive of the alternatives, and its cost advantages would increase with passing decades as inflation makes alternatives more costly” and that BC Hydro “has done a responsible job in forecasting.”

The panel's report also said it did not have the information, time or resources to look at the accuracy of cost estimates and recommended that, if the project proceeds, costs and need should be examined in detail by the province’s independent regulator, the B.C. Utilities Commission. The panel noted it could not conclude the dam was needed on the schedule presented and said the province had failed to investigate alternatives — something it was instructed to do 32 years ago, when the utilities commission first turned down the Site C dam on the Peace River. 

Swain called this failure to research alternatives a ‘dereliction of duty’ in his interview with DeSmog Canada.

“Those are very strong words from a very highly regarded senior official from the Canadian government,” Weaver said Thursday in the legislature. “To be even more blunt, it’s recklessness on the part of the government.”

Weaver continued:

"What we need right now is a government that is willing to show leadership on this, willing to put good policy ahead of ideological politics. My question to the minister is this. Will he listen to the call from every member of this side of the House, along with the expert opinion of the joint review panel and countless others, to send the Site C project to the British Columbia Utilities Commission for a proper regulatory review?"

Bennett continued his refusal to send the project for a review by the B.C. Utilities Commission.

Bennett responded:

"B.C. Hydro figures that we’re going to need 1,100 megawatts of electricity in 2024. We set about, over the past two years, to determine what’s the best way to get that 1,100 megawatts of electricity. We looked at absolutely everything, and the decision that we made on this side of the House was to honour the ratepayer. We chose the option that is the fairest, lowest cost to the ratepayer, but that side of the House wants us to do something different."

But the panel that reviewed the Site C proposal found the government hadn't looked at "absolutely everything," as Bennett states.

“The panel concludes that a failure to pursue research over the last 30 years into B.C.’s geothermal resources has left BC Hydro without information about a resource that BC Hydro thinks may offer up to 700 megawatts of firm, economic power with low environmental costs,” the panel's report read.

The Canadian Geothermal Energy Association (CanGEA) has argued geothermal can meet all of B.C.’s future energy needs at a lower cost than Site C with fewer environmental impacts. The association has requested meetings with Minister Bennett with no success.

"We welcome him to become more informed and to engage in constructive dialogue with the association and with our members," said Alison Thompson, chair of CanGEA.

In a press release, Weaver said the minister's talking points are missing the point. “This dam didn’t make sense for B.C. thirty years ago, and it doesn’t make sense now.”

“The question that needs to be asked is what’s the rush?” Weaver added. “LNG isn’t materializing along the timeline promised by government. Even if B.C. Hydro’s current projections are true, we still have up to four years before we need to start building the dam. We should use that time to explore alternatives before embarking on the largest infrastructure project in B.C. history.”

The full official transcript of the exchange in the Legislature can be viewed on Hansard.

BC Hydro is scheduled to begin construction on the Site C dam this summer, but the project is facing six legal challenges, including one that alleges that Cabinet erred in dismissing key portions of the joint review panel’s findings on the project.  

The dam would be the third on the Peace River and would flood 83 kilometres of the Peace Valley, impacting 13,000 hectares of agricultural land. The project is opposed by B.C.’s Treaty 8 First Nations, several of which have filed lawsuits.

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Part 1 of DeSmog Canada’s exclusive sit-down interview with Harry Swain, the man who chaired the panel tasked with reviewing BC Hydro’s Site C dam, sparked a firestorm of activity on Tuesday.

Energy Minister Bill Bennett responded to Swain’s critique in the Globe and Mail, the B.C. NDP issued a statement on Swain’s comments and an environmental law expert called the statements “unprecedented.”

Martin Olszynski, an assistant professor in the Faculty of Law at the University of Calgary, said Swain’s comments are extremely rare.

“To the best of my knowledge, this is the first time that a panel member has spoken about a previous report in this manner,” Olszynski, an expert in environmental assessment, said. “To my knowledge, it’s unprecedented.”

The concerns Swain raises are not unusual though, Olszynski pointed out.

“The course of actions taken by the B.C. and federal governments in this case are not atypical,” he said. “They very often will ignore, or pay only lip service to, the recommendations of their expert panels. If you talked to other people who have served on similar panels — if they were willing to talk — they might express similar frustration.”

Geothermal Recommendations for B.C. Ignored …. For 32 Years

Certainly, the issue of recommendations being ignored is a live one in the case of the 1,100-megawatt Site C dam proposed for the Peace River. The dam is facing six legal challenges, including one that alleges that Cabinet erred in dismissing key portions of the joint review panel’s findings on the project.

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But beyond that, one of the key issues the panel raised in its report was the B.C. government’s failure to follow a recommendation to investigate alternatives to the dam, particularly geothermal — a recommendation made 32 years ago by the B.C. Utilities Commission when it first turned down the Site C proposal.

“The province or the province and its wholly owned subsidiary BC Hydro should have taken to heart the admonitions of the utilities commission 32 years ago and done some of the basic work that would allow an industry to develop,” Swain told DeSmog Canada. “But they didn’t do it, so there we are.”

In speaking notes obtained by DeSmog Canada, the province prepares to deflect questions about why it hasn’t pursued geothermal.

“While geothermal energy has a role to play in British Columbia, it has been slow to develop and has not developed the track record to reliably meet today’s growing demand,” read the notes prepared for the government’s Site C announcement in December.

Asked what he makes of that statement, Swain responded: “Dereliction of duty.”

The B.C. government has the principal responsibility for lands and resources under the constitution, Swain said.

“And in that sense, the province owes — in my view — an obligation to the citizens of B.C. to do a lot of basic mapping and exploration,” he said. “I don’t think there’s a major resource industry in this country that didn’t start without governments doing some of the basic work.”

Canada is the only country around the Pacific Ring of Fire that does not produce geothermal power at a commercial scale.

Vast Amount of Data Available From Gas Drillers on Geothermal Potential

In the past three decades, technological advances have led to the discovery of even more geothermal potential in B.C. — including in the Peace Country, where the Site C dam is proposed.

“Up in the Peace, in the very strata that are being drilled for natural gas, there’s a lot of hot water,” Swain said. “Moreover, since the well logs of exploration and drilling companies are supposed to be deposited with the provincial government, there is a vast amount of information available. It was surprising to me that no attempt had been made to exploit that information.”

The challenge is that currently BC Hydro, the province’s crown energy corporation, is forbidden by law to involve itself in projects beyond big hydro and large transmission projects.

“All of the other production stuff is to come from the holy private sector,” Swain said.

To prevent future governments and panels from being “seriously uninformed” again, the panel recommended that, regardless of the decision taken on Site C, BC Hydro establish a research and development budget for the characterization of geographically diverse renewable resources.

“It’s probably fair to say that institutionally Hydro really, really wants to build this,” Swain said. “And that’s perfectly understandable. If you ask the Ford company, ‘what would you like to do?’ they’ll say ‘build cars.’ If you ask Boeing ‘what’s the solution to our transportation problems?’ they’ll say ‘airplanes.’ ”

The Canadian Geothermal Energy Association has argued geothermal can meet B.C.’s future energy needs at a lower cost than Site C with fewer environmental impacts. The association has called for a one-year moratorium on Site C to allow time for further due diligence on geothermal.

The LNG Wild Card: Inconsistency in Province’s Statements

One of the B.C. government’s go-to talking points on Site C has been that the dam is needed to power the liquefied natural gas (LNG) industry. In a Jan. 30th letter to the Peace River Regional District, Energy Minister Bill Bennett wrote that liquefied natural gas facilities would drive more electricity demand than the Joint Review Panel accounted for in its report (due to an addition error).

Swain says that, although there was an addition error in the report, it doesn’t change the conclusion: demand for the dam wasn’t proven.

“Given skepticism about LNG and about demand elasticity, I see no reason to modify the conclusion,” Swain said. “Frankly, I think their low-demand figure was probably overstated. So far there is no evidence that even their low usage scenario is likely to take place.”

Beyond that, if the province’s original LNG dreams had come to pass as quickly as they’d stated and if the plants had relied on grid electricity (two big ifs), that power would have been needed well ahead of Site C’s in-service date of 2024. A single LNG plant can require as much as 700 megawatts of electricity to run the giant compressors required to cool gas to 163 degrees below zero; at least 10 plants are proposed for B.C.’s coast, but it’s unclear whether any will come to fruition.

“If the initial scenario took place, the power demand would arise a long time before Site C could be built,” Swain said. “There really wasn’t a compatibility between the two statements of the province if you think of one statement about the development of the LNG industry and the second about the timeframe in which Site C was to be built. By their own story, they had an inconsistency.”

Site C Dam ‘No Ordinary Project’

About 20 B.C. local governments have asked the government to send Site C to the B.C. Utilities Commission to further investigate demand and costs — a recommendation made in the panel’s report and echoed by Swain in Part 1 of his interview with DeSmog Canada.

With a price tag of $8.8 billion, Site C would constitute the largest expenditure of public money in B.C. history.

“Site C is not an ordinary project,” the panel wrote in its report.

Swain said British Columbians should pay attention because “it’s going to effect them in the pocket book,” “destroy valuable bits of landscape” and “affect the constitutionally protected rights of First Nations.”

He suggested British Columbians consider the dam in light of the alternatives.

“Have we really pushed conservation and efficiency as far as they can go? And the answer is no,” he said. “What other kinds of generation or energy production are available and what are their costs and benefits?”

Swain called B.C.’s refusal to consider its entitlement under the Columbia River Treaty “inexplicable” and noted the verdict is still out on how British Columbians will react to electricity prices going up 30 per cent in the next three years (demand could decrease, for example).

Ultimately, the way forward needs to be one that considers all the options, not just large hydro dams.

“The province has defined the role of Hydro as being very limited,” Swain said. “If this were not the BC Hydro company, but simply … the ‘energy company’ whose job it was to make sure that demand was satisfied at reasonable prices regardless of source, regardless of who got to build and own, regardless of those kinds of extraneous considerations, we might have a more balanced view.”

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In his first interview on the Site C dam, the chair of the federal-provincial panel appointed to review Canada’s largest current infrastructure project said the B.C. government was unwise to green-light the project without a review by the B.C. Utilities Commission and would have been better off to delay the decision by a few years.

“There’s a whole bunch of unanswered questions, some of which would be markedly advanced by waiting three or four years,” Harry Swain told DeSmog Canada. “And you’d still be within the period of time, even by Hydro’s bullish forecasts, when you’re going to need the juice.”

Swain, a former deputy minister of Industry Canada and Indian and Northern Affairs Canada, spoke to DeSmog Canada on his own behalf, not on behalf of the panel. In a wide-reaching interview, Swain also described the province’s failure to investigate alternatives to the dam as a “dereliction of duty.”

The B.C. government gave the go-ahead for BC Hydro’s Site C dam in December and construction is scheduled to begin this summer. If built, it will be the largest public infrastructure expenditure in the province’s history. The dam is facing six legal challenges, including one that alleges that Cabinet erred in dismissing key portions of the joint review panel’s findings on the project.

The dam — which was first turned down by the B.C. Utilities Commission in the early 1980s — would be the third on the Peace River and would flood 83 kilometres of the Peace Valley, impacting 13,000 hectares of agricultural land. The project is opposed by B.C.’s Treaty 8 First Nations, several of which have filed lawsuits.

Swain’s panel made 50 recommendations to the provincial and federal governments, but stopped short of recommending for or against the project.

“The decision on whether the project proceeds lies with elected officials, not with the panel,” the 471-page report read.

“I’m still strongly of the view that review panels are advisors and governments get paid to make the decisions and live with the consequences at the next election,” Swain told DeSmog Canada.

But that didn’t stop him from outlining how he believes the government has acted prematurely.

“You shouldn’t take decisions before you need to,” Swain said. “That means you’ll have much more information when you finally have to take a decision. Building electricity facilities in advance of need only costs money.”

‘Wisdom Would Have Been Waiting’

The panel’s report predicted that in the first four years of production, the Site C dam would lose at least $800 million because BC Hydro would generate more power than the province needs at a cost of $100 per megawatt hour — when the market price for that power is currently $30 per megawatt hour.

“Wisdom would have been waiting for two, three, four years to see whether the projections they were making had any basis in fact,” Swain said. “And they would have been able to make a better-informed decision and not necessarily a more expensive one.”

In its report, the panel wrote that it couldn’t conclude that the power from Site C was needed on the schedule presented, adding: “Justification must rest on an unambiguous need for the power and analyses showing its financial costs being sufficiently attractive as to make tolerable the bearing of substantial environmental, social and other costs.”

Some of the questions that still need to be answered, according to Swain, include the real cost and availability of alternatives, how B.C. should use its Columbia River rights, how British Columbians will react to increased electricity prices (which could decrease demand) and how the province’s liquefied natural gas industry will develop.

Panel Instructed Not to Pass Opinion on First Nations Rights

Asked why the panel didn’t render a “yes” or “no” answer on the Site C dam, Swain responded: “We weren’t asked to.”

Further to that, Swain — who wrote a book on the Oka crisis — outlined the limitations of the review process as it related to First Nations rights.

“They said that we were to catalogue the assertions of First Nations regarding treaty rights and aboriginal rights. But we were not to pass an opinion on them. We were not to say whether consultation had been adequate and so on and forth. If you are forbidden to talk about that, you can not come to a conclusion about the overall project,” Swain said.

“The question is: well, if we had recommended anything, what would we have said? And I think the conclusion is probably pretty apparent from the text. We would have said something to the effect that it might be wise to wait for a couple years and see if some of the projections on which the project rests eventuated. However, they didn’t ask — nor did they wait.”

Decision to Skip Review by B.C. Utilities Commission ‘Not Good Public Policy’

In its report to the government, the panel said it did not have the information, time or resources to look at the accuracy of cost estimates and recommended that, if the project proceeds, costs should be examined in detail by the province’s independent regulator, the B.C. Utilities Commission.

“Knowing that the province had decided to exempt the project from the scrutiny of the utilities commission, we nonetheless felt that that was not good public policy and recommended otherwise,” Swain said. “They of course gave us the back of their hand.”

What did he think of the province ignoring that recommendation?

“I expected it entirely and I don’t think it was wise,” he added.

There were big financial questions — related to the borrowing of nearly $9 billion, the cost estimates for the project and the effect of rates on consumer demand — that the panel could not examine, Swain explained.

“That requires much, much more time and expertise,” he said. “Moreover it is a job that the utilities commission is specifically set up to be able to do.”

Government Documents Downplay Role of B.C. Utilities Commission

In documents obtained by DeSmog Canada via a freedom of information request, government spokespeople were prepped to respond to questions about why the project wasn’t referred to the utilities commission. The speaking notes were prepared for the Dec. 16 press conference announcing the B.C. government’s decision to move ahead with Site C.

“The BCUC does not actually have the capacity to do the kind of work that has been done by BC Hydro in analysing and reviewing the project, particularly the costs,” the speaking notes read.

“Well, whose fault is that?” Swain responded. “How about the owners of the utilities commission? It is their legislation that set it up to do specifically that job and if it hasn’t got the resources to do it, I think you’ve got to look back to the government.”

Swain noted that the government is essentially arguing that the proponent of the project, BC Hydro, should be relied on to review its own project.

“Is the answer therefore that such projects are only to be examined by the proponent?” Swain said. “Recall about the first thing that happened after they approved it was that they confessed, ‘Oh golly, the price is about a billion dollars higher than we thought.’ ”

Harry Swain in his Victoria home during an interview with DeSmog Canada. Photo: Emma Gilchrist.

The speaking notes obtained by DeSmog Canada also said: “The costs of Site C have been independently reviewed by KPMG and an independent panel of contractors — work that the commission would have contracted out itself regardless.”

When asked why, despite being well aware of the KPMG review, the panel still recommended a review by the utilities commission, Swain responded: “If you ask Lockheed Martin what the cost of the F-35 is going to be, they — the proponents — will give you a number. And if you believe that number, I have a bridge in Brooklyn that I’d like to sell you.”

He noted that accounting firm KPMG was hired by the project proponent, BC Hydro.

“Consultants hired by the project proponent are being hired in part to demonstrate the reasonability of the work being done by the proponent,” he said. “The last thing that you’d expect would be for the consultants to BC Hydro to say ‘Oh golly, what an interesting error you’ve made.’ It just isn’t going to happen.”

And that’s at the crux of why the panel recommended the project be reviewed by the independent B.C. Utilities Commission — because its mission is “to ensure that ratepayers receive safe, reliable, and non-discriminatory energy services at fair rates from the utilities it regulates.”

“I think projects of that nature where the public purse — and the public interest much more broadly — is involved deserve a degree of scrutiny,” Swain said.

“I think the province was determined to go ahead with the project from the beginning.”

Read Part 2 of DeSmog Canada’s Interview with Harry Swain: ‘Dereliction of duty’: B.C.’s failure to investigate alternatives to the Site C dam

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Geothermal energy offers a low-cost, clean and viable alternative to the $8 billion Site C dam proposed for the Peace River, according to a new report released Tuesday by the Canadian Geothermal Energy Association (CanGEA)

The report, Geothermal Energy: The Renewable and Cost Effective Alternative to Site C, estimates that geothermal power would ring in at about $73 per megawatt-hour (MWh). BC Hydro has estimated the cost of Site C at $83 per MWh. The report also says the proposed geothermal plants could be built for approximately $3.3 billion, less than half the cost of the Site C dam.

“Geothermal can be built as you need it, where you need it, and the capital costs are much lower,” CanGEA Chair Alison Thompson told a press conference in Victoria.

The B.C. cabinet is expected to decide whether or not to proceed with the Site C dam before Christmas. The federal and provincial governments issued environmental assessment certificates for the Site C dam in October, but the project is facing five legal challenges and calls from local governments to delay the decision for a year while other options are considered. The dam would impact 13,000 hectares of agricultural land in the Peace Valley and is opposed by B.C.’s Treaty 8 First Nations.

Read DeSmog Canada’s 12-part series on the Site C dam.

The joint review panel’s report on Site C called the province of B.C. out for failing to pursue research into B.C.’s geothermal resources over the past 30 years. That report provided wind beneath the wings of the geothermal industry, Thompson said.

“Evidence at the Site C hearings created new urgency for the mapping work we had already begun,” she said.

Now that favourability mapping indicates that geothermal can meet all of B.C.’s future energy needs, including the 1,100 MW of capacity and 5,100 gigawatt hours per year of energy that would come from the Site C dam.

“It’s been convenient to dismiss geothermal,” Thompson told the press conference. “This mindset around what people think geothermal is, it’s just not true anymore. And so B.C. has remained on the sidelines over the past 30 years when 25 other countries have installed geothermal power plants.”

Canada is the only country around the Pacific Ring of Fire that does not produce geothermal power at a commercial scale. (Read: 5 Reasons Why Geothermal is Nowhere in Canada.)

CanGEA’s new report lays out 10 key advantages of geothermal when compared to the Site C dam.

Those include the generation of more permanent jobs (2,000 permanent jobs for geothermal vs. 150 permanent jobs for the Site C dam) distributed throughout the province and a reduced need for transmission upgrades.

“The $1 billion northeast transmission line can be avoided or delayed,” Thompson said.

Thompson also pointed to a proposed geothermal power plant in Valemount, an area that consistently experiences brownouts due to its location at the end of a transmission line.

“That project provides base-load power for the area, provides economic stimulus and avoids the need to shore up that [transmission] line,” Thompson said.

There are also opportunities to decrease the greenhouse gas emissions of the oil and gas sector by electrifying the region, displacing the use of fossil fuels at well sites, for instance.

Oil and gas companies have helped identify B.C.’s geothermal potential through their drilling in the northeast of B.C. Often the water and gas that comes up out of the ground is piping hot, which presents another opportunity.

“They could run that through a heat exchanger, which then can be sent to the power plant,” Thompson said. “They can produce micro-power, enough probably for their own operations. They often, on purpose, cool the products before it goes into their machines. It’s a win-win for everybody.”

CanGEA is calling for a one-year moratorium on the final investment decision on Site C to allow time for further due diligence on geothermal. The industry group is also calling on the B.C. Utilities Commission to review its findings and make recommendations by November 2015.

“We’re crazy not to look at this further,” Oak Bay-Gordon Head Green MLA Andrew Weaver told DeSmog Canada. “The government has said many times that they want to protect the ratepayer … that requires them to look at geothermal. It would be irresponsible not to do it.”

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