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.”

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Days away from a final decision on Site C, Peace Valley landowners have launched a “Home for the Holidays” campaign featuring photographs of families who would lose their homes to the $9 billion dam and appealing to the NDP government to terminate the project.

Ken and Arlene Boon, who appear in one of the Christmas card-like photos standing on the steps of their third generation farmhouse overlooking the Peace River, said 70 valley residents are waiting “on pins and needles” to find out if the project will be cancelled, a decision Premier John Horgan said he will announce before the end of December.

“It’s tough,” Ken Boon told DeSmog Canada. “I know there are a lot of people right now who are expecting the worst but we are definitely not throwing in the towel considering what we’ve all been through.”

“We haven’t focused on Christmas,” said Arlene Boon, a grandmother of four. “It’s not important right now.”

Ken and Arlene Boon in a 'Home for the Holidays' postcard circulated on social media.

The Boon’s farmhouse, built by Arlene’s grandfather, was expropriated last December for a Site C highway relocation but the former Liberal government gave the couple permission to remain in their home until after last May’s provincial election.

The new NDP government subsequently granted the Boons what Arlene called a “stay of execution,” allowing them to live in their home while the watchdog B.C. Utilities Commission (BCUC) conducted an independent review of the project and pending a final decision on Site C.

The review disclosed among many other issues that Site C is over budget, falling behind schedule, burdened by financial and legal issues with its major civil works contractor, and beset with geotechnical difficulties — only two years into a nine-year construction timeline.

“I just find it really hard to believe that the government could make any decision other than to terminate Site C,” said Ken Boon, president of the Peace Valley Landowner Association that represents 70 valley residents who would lose property to Site C’s reservoir.

“I find it frustrating that the lobbyists have come out in full force: paid lobbyists who get access to the key ministers and Horgan,” Boon said, referring to recent efforts by construction trade unions to discredit some of the findings of the BCUC report.

Caroline Beam, who appears on one of the “Home for the Holidays” social media posts with her husband and three sons, said waiting for a final decision has been extremely stressful for her family and is taking its toll on the emotions of her children, aged 7, 11 and 13. They would lose their riverside home near Hudson’s Hope to Site C.

#SiteC #bcpoli pic.twitter.com/epIeg1CJcL

— PVEA (@SavePeaceValley) December 5, 2017

“They have these little wish pyramids and I peeked in and sure enough out of all the things my kids could be wishing for at Christmas time they are wishing for Site C to be stopped,” Beam said in an interview.

“They love their home, they love the valley, they love the river…We have the most amazing home. We could not possibly ask for more. We live in paradise,” said Beam, a school teacher whose great-grandparents lost their home and ranch to the W.A.C. Bennett dam in the 1960s.

“It’s pretty fresh and raw right now. I’m pretty much just doing the best I can to hold it together…If [Site C] moves forward right now, what does that say about our system and our politicians? How do you make your child grow up not cynical?”

Farmers Colin Meek and Leslee Jardine, whose home was expropriated earlier this year for a Site C highway relocation, said the past several years have been very taxing for their family and they are “just patiently waiting” for the final decision. They were also allowed to stay in their house pending a final verdict on the project.

As with other affected landowners and First Nations, the couple expects to learn about the outcome through the media and not directly from a BC Hydro or government representative.

Meek and Jardine, like other families in the Cache Creek area, have had to contend not only with the loss of their farmland but also with disruptive clear-cut logging — in their case, of a spruce and poplar forest that fringed their property — that took place earlier this year for the new $530 million highway route.

“The worst part of it is that it’s changed how we live,” said Jardine. “We can see our house from the highway now and we can hear the traffic.”

“I’m hoping they do the right thing and cancel it. I’m trying to be positive.”

The Peace Valley Landowner Association and two Treaty 8 First Nations have repeatedly asked BC Hydro for the detailed documents about why the new highway route was chosen over a second shortlisted route. The centreline of the new route would cut through the Boon’s farmhouse, the Meek farmhouse, the Boon’s family run campground, and a First Nations cultural area.

BC Hydro has declined to release the detailed documents that outline the relative merits and costs of the two shortlisted routes, saying that the chosen route will affect less agricultural land and offer more passing opportunities for drivers.

Even if Site C is approved, the Cache Creek highway relocation will still be a matter of contention.

B.C.’s Environmental Assessment Office ruled in late August that BC Hydro’s design for the new highway bridge at Cache Creek is out of compliance with its Site C environmental assessment certificate. The BCUC review highlighted the Cache Creek bridge and highway route as a potential source of additional cost overruns.

The EAO also ruled that BC Hydro must consult with First Nations on mitigation for a cultural area, sweat lodge and grave sites impacted by the proposed highway route. The West Moberly and Prophet River First Nations have said that the desecration of gravesites is “not acceptable” in their culture and that the only feasible mitigation is to move the highway route.

The First Nations also stated that a rerouting of the highway would not alleviate their opposition to Site C, which they say is an unjustified infringement of their constitutionally protected rights under Treaty 8. If the project goes ahead, they say they provincial government will face a $1 billion lawsuit.

The landowners said they are circulating the Christmas-themed cards on social media because some of the debate about Site C has focused on the optics of construction workers receiving “pink slips” before Christmas.

“It’s not about having a job, it’s about having a home,” said Beam. “The valley is irreplacable.”

Yesterday BC Hydro released its Site C jobs figures for October, showing that 400 workers were dismissed after it published widely-circulated figures for September.

According to the Peace River Hydro Partnership, the main civil works contractor for the project, almost 100 workers were laid off in October and early November. The layoffs of 30 people in early November were “part of a series of planned scheduled lay-offs” over the winter, according to a statement the partnership emailed to DeSmog Canada.

BC Hydro has still not stated how many days or weeks a worker must be employed to be included in monthly jobs statistics, and whether or not dismissed workers are counted in Site C employment statistics in any given month.

The October jobs tally shows 1,974 people employed by Site C. About 475 are either “engineers” or on BC Hydro’s Site C project team. Contract engineers account for an additional 210 jobs.

Image: Ken Boon at his home in the Peace Valley. Photo: Garth Lenz | DeSmog Canada

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Alternatives to the $10 billion Site C dam would produce significantly more jobs than construction of the controversial hydroelectric dam, according to a new study led by the University of British Columbia.

The analysis by researchers from UBC’s Program on Water Governance found that if Site C is scrapped, there would be modest job losses in the short-term — 18 to 30 per cent until 2024 — but job gains of between 22 and 50 per cent through 2030.*

A recent three-month investigation conducted by the B.C. Utilities Commission found alternatives to Site C, including wind energy and conservation measures to reduce provincial electricity demand, could replace the dam at an equal or lower unit energy cost.

“By 2054, the B.C. Utilities Commission alternative portfolio will have created three times as many jobs as Site C,” Karen Bakker, one of the authors of the report and co-director of the Program on Water Governance, told DeSmog Canada.

“Site remediation, geothermal construction and energy conservation will create thousands of jobs each year,” she said.

Alternative energy, such as wind power, creates many more jobs for every dollar spent, Bakker told DeSmog Canada.

ICYMI: Geothermal Would Create 15 Times More Permanent Jobs Than Site C, Panel Told

Using BC Hydro and BCUC figures, the researchers concluded that between now and 2024 continuing Site C would create 35,398 cumulative person-years of employment compared to up to 24,612 for alternative portfolios.

However by 2054, the alternative portfolio will have completely eclipsed Site C, with 37,618 job-years in the Site C scenario and 105,618 for alternatives.

Wind power and conservation efforts would create three times as many jobs as #SiteC https://t.co/FcRG4wzKKV #bcpoli #alternatives #cleanenergy #energyconservation

— DeSmog Canada (@DeSmogCanada) November 28, 2017

Pressure to Go Ahead

As government mulls over Site C options, with a decision on whether to continue or scrap the project expected by the end of the year, the spectre of more than 2,000 construction workers losing their jobs shortly before Christmas has weighed heavily. The government is also facing pressure from union groups, such as the Allied Hydro Council of B.C. and Christian Labour Association of Canada, who say the project is too far along to quit.

But, if the project is terminated, remediation of the site will require many workers and provide a transition period for the workforce and the local economy, Bakker said.

“It is a big project. It would absorb most of the workers on site… and there will be similar pay scales and skill levels to construction jobs,” she said.

“Two years of remediation and 10 years of monitoring will create about 10,000 jobs at similar pay levels — that’s the transition term for workers — and then, looking at the long term, you can generate more jobs for the dollars spent and generate jobs across the province and especially in the Peace region because it has the best wind resources in the province,” she said.

The analysis found that every direct job at Site C costs over $1 million and, if all jobs are taken into consideration, the cost per job is about $225,000.

BC Hydro figures put current Site C employment at 2,375, but, once construction is complete in 2024, Site C would employ only 74 people each year.

Job Losses Overstated

Even current employment numbers are being questioned by some groups, such as the Peace Valley Landowner Association, which claims the job numbers have been inflated.

“We are concerned that public confusion on this point may make things more complicated for decision-makers in an already complex situation,” says an Association statement.

West coast energy consultant Robert McCullough, who has acted on behalf of the Peace Valley Landowner Association and Peace Valley Environment Association, agrees that there is a common misconception that cancelling Site C will mean the loss of construction jobs.

“The reality is that, while some of the construction jobs will end at Site C, more than twice the person-years of employment will be created with investment into alternative energy projects across the province,” he said in a report.

A bonus is that the jobs will have a wider range of specialization than simply energy and resource development, he said.

More than $2 billion has already been spent on Site C and remediation would cost another $1.8 billion, but, costs of continuing construction are likely to skyrocket from the current $8.9 billion budget.

Site C was not sent to BCUC for recommendations and scrutiny before the previous BC Liberal government pushed the project ahead, but a BCUC report requested by the NDP government, concluded it is already behind time and over budget and is likely to cost at least $10 billion to complete.

*Update Wednesday Nov. 29, 2017 10:15am pst. This article previously stated the UBC analysis was independently reviewed. It did not receive an independent review.

Image: Wind turbines in B.C. Photo: Garth Lenz | DeSmog Canada

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The NDP’s trade union base fired another missive today in an attempt to persuade the B.C. government to greenlight the Site C dam, as party insiders and union donors to the party continue to ramp up lobbying efforts in support of the $9 billion hydro project.

The Allied Hydro Council of B.C. held its second press conference in a week attempting to discredit some of the findings of the independent B.C. Utilities Commission (BCUC) investigation into Site C.

The three-month BCUC investigation, which included troubling financial information on Site C uncovered by the auditing firm Deloitte LLP, found that Site C is behind schedule and over budget, with a final cost that could exceed $10 billion or, in a worst case scenario, more than $12.5 billion. The BCUC also determined that a renewable energy portfolio — primarily wind and geothermal — would provide cheaper and more dependable power than Site C.

But at a Wednesday press conference, the council released two short reports it commissioned showing “serious problems” with the BCUC’s analysis of the cost of cancelling Site C, claiming that the option of finishing the project, as opposed to terminating it, is the “hands-down winner.”

One 8-page report was written by economist Marvin Shaffer, a registered lobbyist for the council, which donated almost $100,000 to the BC NDP between 2005 and 2014, according to Elections B.C.

ICYMI: What You Need to Know About the B.C. Utilities Commission and the Site C Dam

ICYMI: Site C Dam Over Budget, Behind Schedule and Could be Replaced by Alternatives: BCUC Report

Shaffer held senior positions with the NDP government in the 1990s, including as the head of the Crown Corporations Secretariat. On November 16, Shaffer registered his intention to lobby the premier’s office on behalf of the Allied Hydro Council during the last two weeks of November.

The second report was authored by lawyer Jim Quail, an energy expert and long-time NDP supporter whose trade union background overlaps with that of Horgan’s chief of staff, Geoff Meggs. Quail’s Vancouver law firm — on whose letterhead the 4-page report was written — donated more than $3,500 to the BC NDP between 2015 and 2017, according to Elections B.C.

The Allied Hydro Council, a bargaining agent for unions at previous large hydro projects, said the BCUC report made “unbalanced” assumptions about power alternatives to Site C, understating the costs, risks and disadvantages of solar, wind and geothermal.

“The new B.C. NDP government has been left a disturbing legacy by the former BC Liberal government but now it has to make the best of it,” said Allied Hydro Council President Chris Feller. “And that means completion of Site C…”

Robert McCullough, a U.S. energy economist hired by the Peace Valley Landowners Association, a group of 70 landowners who will lose homes and property to Site C, pointed out that the Allied Hydro Council had a chance to weigh into the Site C investigation when it submitted a report to the BCUC, but failed to make compelling arguments.

“It’s a bit cheeky,” McCullough said of the new reports. “They presented at the BCUC and they were generally rejected there.”

McCullough, who is neither registered as a lobbyist nor a donor to the NDP, said the cost of clean energy renewables like wind and solar is falling so rapidly around the world that the prices cited in the BCUC report are already too high and “obsolete.”  

“I’m afraid they are building a sand castle with the tide coming in,” said McCullough, whose testimony before a U.S. Senate Committee helped sparked the criminal investigation into Enron’s collapse.

Speaking to press gallery reporters at a regular briefing today, B.C. Premier John Horgan said the government is still collecting information about Site C and has not yet made a decision.

“We’ve heard from people who say the utilities commission work was exemplary, and we’re heard from people who say the utilities commission work was deficient in a number of areas,” said Horgan. “So we have asked for more information.”

#NDP #Union Heavyweights Come Out Fighting for #SiteC https://t.co/Tr1b9s70Gm #peacevalley #BCUC #bcpoli #lobbying

— DeSmog Canada (@DeSmogCanada) November 23, 2017

NDP Donor Unions Lobby Government on Site C and Energy Issues

Running today’s Allied Hydro Council press conference was Bill Tieleman, a former NDP strategist who spearheaded last week’s release of another Allied Hydro Council report that also challenged conclusions reached by the three-month BCUC investigation into Site C.

Tieleman, a columnist for 24 Hours and The Tyee, is a registered lobbyist for 14 organizations, including nine trade unions. Tieleman was also the communications director for former NDP Premier Glen Clark.

Among the unions employing Tieleman as a lobbyist is the International Association of Heat and Frost Insulators and Asbestos Workers, which represents workers involved in B.C.’s insulation industry, including in construction. That union donated more than $22,000 to the NDP in 2016 and 2017, according to Elections B.C.

Records show that on July 31 Tieleman registered to lobby Horgan and 10 Cabinet ministers on behalf of that union to promote “the creation and protection of private sector jobs, economic development and fair labour laws in regard to BC Hydro, Site C dam project and other infrastructure.”

The Cabinet ministers Tieleman intended to target included Energy Minister Michelle Mungall, Finance Minister Carole James and Doug Donaldson, Minister of Forests, Lands and Natural Resource Operations.

That same day, on the union’s behalf, Tieleman registered his intention to lobby Horgan and seven ministers, including Mungall, James and Environment Minister George Heyman, on energy issues — including “energy conservation, green energy projects [and] appropriate regulations.”

Tieleman is also paid as a lobbyist by the International Union of Operating Engineers, which represents workers in construction. That union donated almost $500,000 to the B.C. NDP from 2005 to 2017, according to Elections B.C.

On August 16, Tieleman registered his intention to lobby Horgan, his chief of staff, and a slew of ministers and their staff on behalf of Local 115 of the union of operating engineers, with the intended outcomes of improving labour relations and creating and protecting jobs.

Those ministers included Mungall, James, Donaldson, Labour Minister Harry Bains, Attorney General David Eby, Transportation and Infrastructure Minister Claire Trevena, and Bruce Ralston, the Minister of Jobs, Trade and Technology.

Then, on November 6, on behalf of the Construction and Specialized Workers’ Union, Tieleman again registered his intention to lobby Horgan and 10 Cabinet ministers, including Mungall and James, this time focusing his efforts on “developing infrastructure using skilled and training BC labour and apprentices, creating jobs and local benefits.”

The Construction and Specialized Workers’ Union donated $122,500 to the B.C. NDP between 2005 and 2017, according to Elections B.C. — part of an estimated $14 million that was given to the B.C. NDP by unions between 2005 and 2015, according to a Postmedia news report.

On November 17, Tieleman continued his lobby efforts, registering his intention to lobby Horgan and six ministers, including Mungall, to advocate for “job creation and protection” on behalf of the Ironworkers Union Shop Local 712, a union representing steel fabrication workers.

The Ironworkers union donated about $45,000 to the BC NDP between 2005 and 2015, according to Elections B.C.

So What’s In It for the Allied Hydro Council?

The Allied Hydro Council hoped to represent Site C workers.

But BC Hydro dashed the council’s hopes in 2015 when it changed the long-standing labour model for building dams in the province and moved to an open-shop model that sought to curb organized labour activities.

The majority of Site C workers employed by the project’s main civil works contractor, Peace River Hydro Partners, are represented by the Christian Labour Association of Canada (CLAC), formed in 1952 to represent construction industry and other workers on the basis of “Christian social principles.”

CLAC donated about $4,300 to the B.C. Liberal Party between 2012 and 2016, according to Elections B.C., which does not record any CLAC donations to the NDP.

Unlike unions represented by the Allied Hydro Council, CLAC does not belong to the B.C. Federation of Labour, which gave $1.5 million to the BC NDP between 2005 and 2017.

Three unions affiliated with the Allied Hydro Council attempted to raid CLAC members over the summer, but they were not successful. They included two of the unions that employ Tieleman as a lobbyist — the International Union of Operating Engineers, local 115, and the Construction and Specialized Workers Union, local 1611.

Feller said the council is “hopeful” there will be Site C jobs for its members in the future.

What Comes Next in the Site C Battle?

The Allied Hydro Council, which represents all the building trades unions in B.C., warned of a 10 per cent increase in hydro bills if Site C is cancelled, while former BC Hydro CEO Marc Eliesen, calling Site C a “white elephant,” has said rate increases could be as high as 40 per cent if the dam is completed.

Site C’s cost has already ballooned from $6.6 billion in 2010, to $7.9 billion in 2013, to $8.8 billion in 2016 to $9 billion in 2017. The BCUC report warned that figured could easily reach $10 billion due to ongoing risks and uncertainties with the project and its construction.

In Newfoundland and Labrador and Manitoba, where large dams are also under construction, hydro customers now face double-digit rate increases due to cost overruns.

ICYMI: The Startling Similarities Between Newfoundland's Muskrat Falls Boondoggle and B.C.'s Site C Dam

In Newfoundland and Labrador, the $12.7 billion Muskrat Falls dam will add an estimated $1,800 to the annual hydro bill of every household.

Stan Marshall, the CEO of Nalcor Energy, the Crown corporation in charge of building Muskrat Falls, has said the project is a “boondoggle” that should never have proceeded, while David Vardy, the former chair and CEO of Newfoundland’s public utilities board, has warned B.C. that it would be folly to continue building Site C.

The government has said it will make a final decision about Site C before the end of the year, based on the best outcome for B.C. ratepayers.

Image: Premier John Horgan. Photo: Province of B.C. via Flickr

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As many countries move away from big hydro projects, B.C.’s government must decide whether to continue work on the Site C dam. The controversial megaproject would flood a 100-kilometre stretch of the Peace River Valley and provide enough power for the equivalent of about 500,000 homes.

The B.C. Utilities Commission, an independent body responsible for ensuring British Columbians pay fair energy rates, found the dam is likely behind schedule and over budget, with completion costs estimated at more than $10 billion. In a “high impact” scenario, it may go over budget by as much as 50 per cent.

ICYMI: Site C Dam $600 Million Over Budget, Will Miss River Diversion Timeline, Says BC Hydro CEO

The dam has faced court challenges and political actions by Treaty 8 First Nations and farmers whose land would be flooded. Treaty 8 First Nations stand to lose hunting and fishing grounds, burial sites and other areas vital to their culture and sustenance. West Moberly and Prophet River First Nations demonstrated the devastating environmental impacts Site C will have.

The Peace Valley’s land and waters are an integral part of First Nations’ identity, stories, songs and language. An open letter opposing the project, signed by 27 people and groups, including Amnesty International, says the project betrays Canada’s commitment under the UN Declaration on the Rights of Indigenous Peoples. Consent from affected Indigenous Peoples is required for developments such as megadams, yet the West Moberly and Prophet River First Nations did not give consent.

BC Hydro’s economic analysis also ignored ecosystems and the benefits they provide. The David Suzuki Foundation estimates ecosystem services from farmland, wetland and other natural capital in the Peace watershed are conservatively worth $7.9 billion to $8.6 billion a year. Services that sustain the health and well-being of local communities include air and water filtration, erosion control, recreational services and wildlife habitat.

The replacement value of what will be lost by flooding far exceeds the dam’s economic returns. Failure to account for the loss of ecosystem services puts us on a destructive course and undervalues natural capital in regulatory decisions.

Alternative energy sources such as wind, solar and geothermal, leveraging existing projects and prioritizing localized generation could be as good — or better — for B.C. ratepayers as the megadam. Alternative energy has the advantage of being able to be timed for when it’s needed.

ICYMI: Geothermal Would Create 15 Times More Permanent Jobs Than Site C, Panel Told As BCUC Hearings Draw to Close

Additional generation capacity may not even be necessary because BC Hydro currently exports or sells a significant amount of power, often at a loss, outside the province.

Serious concerns are also being raised about production and release of methylmercury from soil. When land is flooded, naturally occurring soil bacteria can convert mercury to methylmercury, a toxic compound that can move up the food chain and potentially harm human health. Modelling projections for Muskrat Falls dam on the lower Churchill River indicate flooding likely will increase methylmercury 10-fold in the dammed river and 2.6-fold in surface waters downstream. Methylmercury concerns loom at 22 major dams now proposed or under construction close to Indigenous communities in Canada, including Site C.

The area to be flooded is some of the North’s most arable farmland. Agrologist Wendy Holm estimates this breadbasket can feed a million people in the region, an important feature as climate change alters growing seasons and demands more local food systems.

ICYMI: B.C. Taxpayers Paid Millions for the Prime Farmland BC Hydro Will Flood with Site C Dam

Dams now supply about three-fifths of Canada’s electricity. A long-held belief that big hydro projects are the most economically sustainable energy options is fast losing support as renewable energy costs plummet and projects multiply worldwide. The Peace Valley has an incredible ability to generate natural wealth if protected from development. The alternative is ecological fragmentation.

Economic scrutiny of Site C was long overdue but only answers some questions about hydro megaprojects. We can’t elevate the economy above what we need to survive. Humans are now the primary factor altering the physical, chemical and biological properties of the planet on a geological scale. Building more megadams epitomizes the folly of our ways.

The Site C dam should never have been approved. Continuing construction is bad public policy, and it’s not too late to halt it. Canada must join other nations and stop the destructive, unnecessary practice of damming major rivers and running roughshod over Indigenous rights and title. Lower impact renewable energy, like wind, solar and geothermal, look better every day.

David Suzuki is a scientist, broadcaster, author and co-founder of the David Suzuki Foundation. Written with contributions from David Suzuki Foundation Senior Communications Specialist Theresa Beer.

Learn more at www.davidsuzuki.org.

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A highly anticipated review of B.C.’s Site C dam has found the project is likely to be over budget and behind schedule and alternative energy sources could be built for an equal or lower unit energy cost.

The report from the B.C. Utilities Commission released Wednesday confirmed many of the concerns that have been raised about the project for years.

The panel found BC Hydro’s mid-load forecast for electricity demand in B.C. “excessively optimistic” and noted there are risks that could result in demand being less than even BC Hydro’s lowest demand scenario.

The panel was “not persuaded that the Site C project will remain on schedule” and found “the project is not within the proposed budget of $8.335 billion.”

Currently, completion costs may be in excess of $10 billion, the report read.

The panel concluded it would be too costly to suspend the dam and potentially re-start construction later and focused its efforts on laying out in detail the consequences of either abandoning or completing the dam. The decision now rests with the B.C. government.

Site C, the third dam on the Peace River, has been controversial for many reasons — but perhaps most of all because the project was exempted from review by the province’s independent utility regulator, the B.C. Utilities Commission.

After coming to power this July, B.C.’s new NDP government immediately sent Site C — which has been under construction for two years — for an expedited review by the commission.

The commission considered 620 written submissions and 304 oral submissions from experts and members of the public in preparing its report.

Minister of Energy, Mines and Petroleum Resources Michelle Mungall said the government plans on making a final decision on the project by the end of the year.

“Now it is our turn, as government, to determine whether Site C is in the best interests of British Columbians, after considering the BCUC’s findings and other issues outside the scope of this review,” Mungall said in a statement.

“This will be an extremely difficult decision. We inherited a project that was advanced by the previous government without proper regulatory oversight, is now more than two years into construction, employs more than 2,000 people, and on which about $2 billion has already been spent.”

The government will meet with First Nations before making a decision, Mungall said.

Energy analyst Robert McCullough, working on behalf of the Peace Valley Landowner Association, said he believes the BCUC report spells the beginning of the end for Site C.

He called the report “courageous” because it basically rejects every part of BC Hydro’s submission, McCullough said.

Site C Dam Over Budget, Behind Schedule and Could be Replaced by Alternatives: BCUC Report https://t.co/u1Mh7hGwVv #SiteC #Hydro #bcpoli pic.twitter.com/9aycFzvRWg

— DeSmog Canada (@DeSmogCanada) November 1, 2017

Faulty Demand Forecasting Used to Justify Site C

The panel’s report finds BC Hydro has continued a historical pattern of over-forecasting electricity demand and notes the accuracy of BC Hydro’s industrial forecasts has been “considerably below industry benchmarks.”

The failure of an LNG export industry to materialize in B.C. has significantly reduced the likelihood that BC Hydro’s load forecasts will be accurate, the panel found.

The panel also found BC Hydro failed to accurately account for the impact that rising electricity costs have on consumption.

Additionally, given current low market prices and the likelihood of increasing supply, the panel found that BC Hydro’s proposed export price forecast “should not be relied upon.”

An independent analysis provided to the BCUC by the auditing firm Deloitte found between 1964 and 2016, BC Hydro overestimated future electricity demand in B.C. 77 per cent of the time.

The panel’s critique of BC Hydro’s demand forecasting falls in line with the analyses and opinions of numerous experts who have pointed out the crown corporation’s long history of inaccurate forecasting and the potential for costly oversupply.

Alternative Energy “Increasingly Viable,” Panel Finds

The panel critiqued BC Hydro’s modelling of alternatives as unreliable, saying it is “opaque in its assumptions” and uses out-of-date cost estimates for wind and solar.

The panel stated it found a pairing of alternative energy sources and conservation efforts “increasingly viable” at an equal or lower cost than Site C

During two days of technical briefings by experts, the panel heard BC Hydro consistently ignored or over-inflated the costs of wind, solar and geothermal.

In a submission prepared for the BCUC, North American hydroelectric expert Robert McCullough noted the price of renewables has dropped dramatically since 2010, when the Site C project was resuscitated by the B.C. government. During the last seven years the price of solar dropped 74 per cent, while wind dropped 65 per cent.

In August, BC Hydro submitted to the BCUC that it had screened out solar energy on the basis of a cost estimate in 2025 of $97/MWh. In response to a follow-up question from the commission, BC Hydro provided updated cost estimates of $48/MWh.

Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives, is calling for a public inquiry into how BC Hydro and the former Liberal government made the case for the project.

“It’s amazing. I would like to see a full inquiry to investigate how BC Hydro executives and the previous government essentially conspired to manufacture the case for Site C,” Lee said.

“As someone who strongly believes in public sector institutions and Crown corporations, to have our electricity utility lying to us, making up numbers and doing all sorts of spurious comparisons between its preferred option and the alternative is shameful,” he said.

ICYMI: Geothermal Would Create 15 Times More Permanent Jobs Than Site C, Panel Told

The panel developed its own model for assessing Site C alternatives and found “it is possible to design an alternative portfolio of commercially feasible generating projects and demand-side management initiatives that could provide similar benefits to ratepayers as Site C.”

Further still, the panel found B.C. could pursue alternative energy and swallow the estimated $1.8 billion cost of terminating Site C and still end up with overall electricity costs comparable to building Site C.

The advantage of alternative energy, the panel states, is its incremental nature.

Combining energy conservation efforts with “smaller scale renewable projects provides flexibility to better match generation with demand.”

Conservation programs and smaller scale projects built by independent power producers “have project completion times in the range of months to a few years, and each project (or energy contract if it is contracted through an IPP) is much lower in price than Site C,” the panel found.

Site C Behind Schedule and Over Budget

Construction of Site C has been plagued with costly setbacks, the most significant of which occurred with the appearance of tension cracks along the left bank of the Peace River.

In October, the new CEO of BC Hydro, Chris O’Riley, wrote a letter to the BCUC, acknowledging the crown corporation would not meet its own timeline for river diversion due to “geotechnical and construction challenges” — a setback that would add an additional $610 million to the project’s budget.

An independent audit conducted by the firm Deliotte on behalf of the BCUC also identified the risk of construction setbacks inflating the Site C budget.

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 Premier Christy Clark’s Office to discredit the story.

Because Site C is in the early stages of construction and due to “the lack of certainty” around persistent geotechnical issues, “the additional $610 million may just be the first in what could be a continuing series of additional risk events occurring, resulting in further cost overruns,” the panel stated.

Infringement of Treaty 8 Rights Still a Question

In addition to cost overruns from construction delays, the panel found unresolved questions regarding the infringement of Treaty 8 First Nations’ rights could further add to Site C costs.

The West Moberly and Prophet River First Nations maintain the Site C dam represents an infringement of their rights guaranteed under Treaty 8. Although the two nations have brought and lost legal challenges in B.C. courts, the question of rights infringement is far from settled, the panel found.

“The courts have addressed administrative law issues including the Crown’s duty to consult but have not addressed whether the Crown, by approving Site C has unjustifiably infringed the Treaty 8 rights. West Moberly and Prophet River First Nations submit that the Crown bears the risk that in the event a lawsuit is commenced, the court will find in favour of Treaty 8 First Nations.”

Under Treaty 8, the government of Canada promised to guarantee the rights of local First Nations to hunt, trap, fish and continue their traditional way of life on their land.

The option remains for Treaty 8 nations to file a civil case for damages caused by Site C, a possibility the panel considered.

The panel also noted the protection of Indigenous rights and reconciliation were present as a “major sub-theme” in its community input sessions.

“The termination of Site C would be interpreted as a positive and meaningful step in the reconciliation process for those First Nations who did not reach an agreement with BC Hydro,” the panel stated in its report.

So what now?

The panel’s alternative portfolio indicated that under the low-load forecast, new power supply wouldn’t be needed until 2039 and could be met by the addition of 444 MW of wind and demand-side management initiatives, such as increased energy efficiency and optional time-of-use rates.

“The cost to ratepayers of Site C and the Illustrative Alternative Portfolio are virtually equivalent,” the panel states.

But, regardless of the comparative costs, there are other issues to consider when comparing the completion and termination cases, the panel notes.

“Both scenarios involve risk that is not easy to quantify. The major risk of Site C in the short term is whether there will be further construction cost overruns. Site C is a major construction project and therefore inherently at risk of larger cost overruns than a smaller project. It has already exceeded its budget, only two years into a nine-year schedule. There are tension cracks and disputes with its contractors both of which remain unresolved,” the report reads.

B.C. Green Party leader Andrew Weaver said he was encouraged by the report’s finding about alternative energy sources.

“I have long argued that the plummeting cost of alternative renewables makes Site C the unequivocal wrong direction for B.C.’s energy future,” Weaver said in a statement. “Supporting the development of smaller renewable projects presents a significant economic opportunity for all corners of British Columbia.”

It will take leadership to cancel Site C, but it is the right decision, according to Weaver.

“It is unconscionable that the BC Liberals demonstrated such reckless disregard for British Columbians and for sound fiscal management by pushing through such a substantial megaproject without proper due diligence and oversight,” he said.

The panel also notes that there are other ways to meet future energy needs that include changes to government policy. These include re-patriating some or all of the Columbia River Treaty entitlement.

“This energy is generated from water stored behind BC Hydro dams in British Columbia and is as firm and flexible as the energy from Site C,” the panel notes.

Ultimately though, the panel doesn’t take a position on which of the termination or completion scenarios has the greatest cost to ratepayers.

Galen Armstrong, Peace Valley campaigner with the Sierra Club BC, said the case for Site C fell apart “at the hands of BC Utilities Commission.”

“The government is faced with two options: continue with an unnecessary boondoggle, leaving taxpayers and ratepayers on the hook for decades to come, or pivot to a lower-cost alternative energy portfolio including wind and geothermal that would provide jobs for British Columbians at a lower cost,” Armstrong said.

Update Notice: This story was updated at 5:30 p.m. to include additional comment.

– With files from Judith Lavoie

Image: Site C dam construction September 2016. Photo: Garth Lenz | DeSmog Canada

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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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If you live in the Okanagan or Kootenays and dream of putting solar panels on your roof, FortisBC has a proposition for you.

The private utility is proposing to build a 240-kilowatt solar array north of Kelowna — and is inviting its 170,000 electricity customers to rent any number of the 720 new solar panels.

If this pilot project moves forward (the B.C. Utilities Commission will decide by the end of the year), the Ellison Community Solar project will be the province’s first solar facility owned and operated by a utility. If approved, it could be built by the end of 2018.

The company says panel renters will have the satisfaction of supporting solar energy, and at the same time, receive the energy output as a credit on their monthly electricity bills. This without the work of putting panels up on the roof.

But for this solar business model to be a success, FortisBC will not only need to get customers to rent the panels, they will need to confront an awkward question that has emerged during the public comment segment of the BCUC regulatory process that ended last Thursday.

Why is the utility building a solar project in the first place?

Tough Questions About Need for More Power in B.C.

On paper, FortisBC does not appear to need a solar farm.

In its recent filings to the regulator, the company confirmed that the project is not a required energy resource within its existing “resource stack;” FortisBC is in fact viewing the project in isolation of its long-term electric resource plan, “since the energy it will produce is not required to meet customer load.”

They concede the project “would not be built” if it had to follow FBC’s long term plan criteria used to select the optimal set of resources to meet FBC’s load. In other words, if they needed new generation to meet a deficiency in their generation, this project would not be a candidate to fill the void.

So why build new generation then?

FortisBC spokesperson Nicole Bogdanovic says the project is about providing choice. Beginning in 2015 the company reached out and surveyed their customers, and found a strong interest in solar energy.

“People see solar as something they want to get involved in, and they want to grow this industry for a variety of reasons. We want to be there to help them.”

A news release from FortisBC adds that the project will enable the company to gather important information on the installation, operation, and maintenance of community solar arrays.

“This will allow us to make decisions about the potential to expand this program.”

Industrial Users Come out Swinging

The industrial users group (IUG) of FortisBC have come out swinging against the project — their submission to the regulator asks that the BCUC reject the project.

Among many reasons for this they say there is no evidence that any greenhouse gas emission reductions or any other environmental benefits will result from the project.

That despite the likely assumption among solar renters that the opposite is true.

“FortisBC should not be permitted to rely on this view of customers that a solar facility provides environmental benefits when it may not, and in the absence of need for new resources, probably does not.”

When FortisBC was pressed to provide numbers on the environmental benefits of the project [e.g., projected greenhouse gas emission reductions], spokesperson Bogdanovic offered the following: “The reality is, most of our energy needs are met through hydro, so if this [project] offsets greenhouse gases, I think it’s more of a philosophical decision for our customers that feel solar is a cleaner energy source and a thing that we are developing in B.C.”

BC’s First Utility-Owned #Solar Project Would Allow Citizens to Rent Solar Panels https://t.co/kfbz2R0t0U @FortisBC @BCSEA #bcpoli

— DeSmog Canada (@DeSmogCanada) October 10, 2017

Acceptable Risk and Future Need

In its September 28 submission to the regulator, the industrial users group (which did not respond to calls for an interview) takes issue with the fact that all FortisBC ratepayers must ultimately bear the risk of a project the utility admits it does not need.

In the event that the revenue from the rental customers does not cover the cost of the project, writes the group, “FortisBC proposes to recover the cost of such generation from all customers.”

Tom Hackney, Policy Director at the BC Sustainable Energy Association (BCSEA), a non-profit that promotes sustainable energy, says this is true, but counters that on the basis of the project cost (around $960,000), the risk is not an issue.

“On the basis of size, there’s little price risk to ratepayers.”

Hackney’s association has joined with the Sierra Club of B.C. to jointly support the project moving forward.

“This [project] is pioneering, and in the event that this model works, it could start to have a big shift on the grid.”

Hackney explains that B.C.’s total current energy mix (including transportation, industry, etc.) is about 25 per cent electricity, primarily from hydro, and 75 per cent fossil fuels.

If there is a move in society to electrify all of its energy use, he says, we are going to have a real need for renewable energy like solar in the future.

“In that kind of future context, putting solar on your roof, or having some proxies of that [like renting solar] could start to make sense.”

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.

A much-anticipated preliminary report from B.C. Utilities Commission (BCUC) has raised numerous questions about the Site C dam, underlined the extent of missing and out-dated information and pointed out unknowns surrounding the largest and most expensive infrastructure project in B.C.

The 205-page report on the economic viability of the $8.8 billion dam was released only hours before the midnight Wednesday deadline, reflecting the tight timeframe given the panel of commissioners when the NDP government referred the controversial project to the utilities commission in early August.

The utilities commission is the independent body responsible for overseeing BC Hydro and ICBC, both crown corporations that use public funds. However, former premier Christy Clark decided to go ahead with the $8.8-billion plan to build a third dam on the Peace River without a review by the utilities commission.

That means the current review is the first-ever independent examination of the costs and demand for the project. Ohhhh, the anticipation!

However, let us warn you: the preliminary report asks a lot of questions, but draws no final conclusions.

The commission will issue its final report Nov. 1 and it will then be up to government to decide whether to forge ahead, mothball or scrap the project.

For now, the BCUC found the project is on time and on budget for its 2024 completion date and could start producing power one year early, but it is uncertain whether that will continue.

So far, $2.1 billion has been spent on the dam and abandoning the project would cost another $1.1 billion, but that does not include the cost of replacing the power that Site C would generate.

In the case you don't want to plough through 205 pages, we’ve answered five burning questions about the preliminary report.

What is the bottom line?

It is not yet possible to say whether the dam can be completed on time and on budget and whether alternative power sources can provide similar power at a lower cost — which are among questions the commission has been asked by government to answer.

The problem is that, despite a 900-page submission to the commission from BC Hydro, numerous gaps remain and BCUC has posed 73 questions to BC Hydro that need to be answered before decisions are made.

The questions range from an assessment of whether a vital river diversion will go ahead by 2019 (a delay will set back the entire schedule by a year) and why power for several LNG projects are included in BC Hydro’s forecast, to how it has calculated the cost of supplying wind, solar and geothermal power and, with alternative energy costs dropping, why some figures are way out of date.

Those questions mean BC Hydro will have to come up with an entirely new document, according to West Coast energy consultant Robert McCullough, who made a submission to the BCUC on behalf of the Peace Valley Landowner Association and Peace Valley Environment Association.

“They have been pretty much asked to re-file their entire justification and that is a tremendous job,” said McCullough, who is not confident that BC Hydro can come up with all the answers in the short time frame.

“Frankly, at the moment, they might be better off not answering the questions or hoping the political process will bale them out,” McCullough said.

BC Hydro did not respond to DeSmog Canada’s questions.

Does that mean that BCUC might not be able to answer government’s questions by November 1?

Not according to BCUC chair David Morton, who said, in an e-mailed response to questions from DeSmog Canada, that he is confident the panel will be able to give its final report on time.

“Some of the questions are complex and there are inherent uncertainties, such as load forecasting, the economy going forward, possible fuel switching from natural gas to electric, uptake on electric vehicles, the cost of alternative energy sources and so on,” he said.

That means some answers might give a range of possibilities and, in that case, the panel will explain the assumptions and the cost implications for each scenario, Morton said.

Harry Swain, who headed the joint federal-provincial government review of Site C, is impressed at the depth of questions being pursued by BCUC.

“The utilities commission is doing a better job than I thought they might,” he said.

However, sticking to the terms of reference given by government is a problem, according to Swain.

“They are relying on BC Hydro’s 2016 load forecast and, if that is wrong, as I have argued all along, the rest falls by the roadside,” he said.

What That 205-Page BCUC Report on the Site C Dam Actually Said https://t.co/oisSthmJdM #bcpoli #SiteC #hydro @LavoieJudith @BCUtilitiesCom pic.twitter.com/2mBJgeXfoN

— DeSmog Canada (@DeSmogCanada) September 22, 2017

Is this report critical of BC Hydro and the information it has given — or not given?

That depends on the viewpoint.

To Ken Boon, president of Peace Valley Landowner Association, who will be evicted from his home on the north bank of the Peace River if the dam goes ahead, the BCUC interim report amounts to an indictment of BC Hydro.

The report challenges most of BC Hydro’s justifications for the project going forward including power consumption, alternative power costs and financing, Boon said.

“This has truly got to be the beginning of the end for Site C. There is no doubt about it,” he said.

McCullough also believes the BCUC report amounts to intense criticism of BC Hydro.

“The document continuously criticized BC Hydro for failing to provide relevant and supportable materials,” he said.

“This is not the sort of reception you would like to see from a regulatory commission. In my experience, if this happened to me I would be seriously considering a new job offer.”

Swain is interested in how BC Hydro will respond to criticism as the submission appears to repeat what the utility has said all along, rather than coming up with new, concrete answers on load forecasts, over-estimation of power needs and financing assumptions.

“This game is far from over,” he said.

However, Morton said BC Hydro has worked hard on its submission and gaps in information are not surprising.

“It is typical in the BCUC’s review process for a panel to identify further information required to complete its findings. The panel appreciates the work BC Hydro has done to provide the initial submission and looks forward to receiving further information,” he said.

Once the additional information is filed will British Columbians have all the background information about Site C?

Not quite, some of BC Hydro’s information is being kept confidential as it is considered commercially sensitive.

“The panel found the approach to confidential information in the submissions reflects a reasonable balance between providing proper protection to commercially sensitive information while allowing some access with the appropriate safeguards,” Morton said.

But for McCullough, lack of transparency has been one of the major problems with Site C from the beginning.

Secrecy makes no sense as utilities share information with each other and sensitive information is usually covered by a simple confidentiality order, he said.

“No it’s not justified. It’s preposterous,” he said.

What happens next?

The BCUC will hold public hearings around the province starting in Vancouver on September 23 and ending in Victoria on October 11. First Nations input sessions will be held in four locations — Prince George, Fort St. John, Vancouver and Victoria — and experts will testify at technical presentation sessions.

“Now it is time for the public and First Nations to have their say,” said Energy and Mines Minister Michelle Mungall in an e-mailed response to questions

“Once we have the final report, government will consider the advice from the BCUC, along with environmental and First Nations considerations, and make a final decision on the future of Site C in a timely manner.”

Photo: Garth Lenz, Site C dam construction fall 2016.

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.

The Site C dam project faces “significant schedule and cost pressures” that could inflate its final price tag to more than $12.5 billion, according to a new report by one of Canada’s leading auditing firms.

The report, by Deloitte LLP, was commissioned by the B.C. Utilities Commission as part of an independent review of the BC Hydro project on the Peace River ordered by the new B.C. government.

The report substantiates statements from many prominent critics of the project, including former BC Hydro CEO Marc Eliesen, that the $8.8 billion project faces serious risks of major cost overruns.

Deloitte was instructed to examine the options of suspending, cancelling or continuing with Site C, to assist the B.C. government in making a final decision about the project’s future, a verdict that will be heavily influenced by Site C’s finances.

Cancelling Site C Would Cost $1.2B: Report

The Deloitte report concludes that it would be cheaper to cancel Site C than to suspend the project.

Cancelling Site C would cost approximately $1.2 billion, according to Deloitte’s analysis, while suspending construction until 2025 would cost $1.4 billion.

The report provides a striking alternative to BC Hydro’s own estimate submitted to the Utilities Commission that found cancelling the project would cost approximately $3 billion.

For the first time, the 110-page Deloitte report provides British Columbians with detailed information about Site C’s top budget and scheduling risks and other challenges that were kept secret by the previous B.C. government despite a request DeSmog Canada made more than a year ago under B.C.’s Freedom of Information Act.

“The Site C project faces major risks including performance issues of contractor(s), unforeseen geotechnical conditions, and cost risks associated with major contracts that have not been awarded yet,” notes the report.

Deloitte says Site C’s success hinges on the project’s ability to meet a critical milestone that is now at “considerable risk” — diverting the Peace River through tunnels in September 2019 in order to allow construction of the 60-metre high earthfill dam.

Both BC Hydro and the Peace River Hydro Partnership (PRHP) — the consortium responsible for building diversion tunnels and constructing the dam as part of a $1.75 billion civil works contract — recognize that this milestone is in jeopardy, says the report.

“Deloitte notes that PRHP’s ability to meet the critical milestones poses a major risk to the Project.”

#SiteC Dam Costs Could Escalate 40%, Says Auditor's Report https://t.co/ZBJrq7Je9B #bcpoli #bcuc @jjhorgan @AJWVictoriaBC @bchydro

— DeSmog Canada (@DeSmogCanada) September 9, 2017

Site C at Risk of Missing Construction Milestones

Highlighting the risk of missing the milestone is a recent Site C report from B.C.’s Environmental Assessment Office, which concluded that BC Hydro cannot proceed with a bridge related to the river diversion until it develops acceptable mitigation measures for an aboriginal sweat lodge and suspected burial site.

According to the Deloitte report, the Peace River Hydro Partnership told BC Hydro that it would miss the river diversion milestone, but BC Hydro rejected the partnership’s revised schedule.

BC Hydro is now working directly with the partnership on a review whose main purpose is “to develop a plan to mitigate the potential delay,” says Deloitte.

Notably, Deloitte says it does not have the necessary information or mandate to assess the likelihood of success of the mitigation plan or its potential costs.

Diversion of the Peace River must take place in the early fall, a narrow window sandwiched between potential spring and summer flooding and winter conditions that thwart some construction activities.

Even a one-year delay in diverting the river through tunnels will increase Site C’s $8.8 billion cost by ten to 20 per cent, says the report.

A delay of more than one year will boost the project’s price tag by 20 to 50 per cent, concludes Deloitte.

The report reveals troubling financial and scheduling issues BC Hydro has experienced with the Peace River Hydro Partnership (PRHP), a consortium that includes ACCIONA Infrastructure Canada Inc., a wholly owned subsidiary of a Spanish company, and Korean-owned Samsung C&T Canada Ltd.

Calgary-based Petrowest Corporation, the Canadian partner in the consortium, was fired from the Site C project in August when it went into receivership.

Credibility of Site C Forecasts Questioned

The report details how the Peace River Hydro Partnership has fallen behind schedule, noting that it mobilized two months late to the dam site, was delayed in obtaining permits and submitting documents, and has made “slow work progress,” on important tasks such as earth moving and concrete placement.

The partnership, Deloitte notes, has also “consistently excavated lower volumes” of earth than its forecasts.

“The poor correlation between forecast and actual performance…raises concerns about PRHP’s ability to forecast,” cautions Deloitte.

The consortium has claimed additional costs from BC Hydro, but that amount is redacted in the Deloitte document on the grounds that revealing the information could cause harm to BC Hydro.

Deloitte says assessing the PRHP’s claim for additional costs is beyond the scope of its review and would require significant time and resources.

The PRHP’s claim for additional costs, coupled with the sudden loss of indebted Petrowest Corporation from the consortium, pose “additional considerations in the schedule and cost risks,” says Deloitte.

“While according to BC Hydro this [Petrowest] termination will not have ‘a significant impact,’ Deloitte is of the view that this termination will create a period of instability that may impact PRHP’s ability to meet its planned work schedule in the short to medium term.”

Reviewing bid evaluation reports for the major civil works contract, Deloitte found that PRHP’s proposal was ranked second out of four bids for its technical credits, but first for its bid price.

“PHRP may have significantly underbid the Project,” surmises the report. “This may explain the claims that PRHP has submitted to the Project to date to recuperate some of its losses. Deloitte believes that PRHP may continue this trend as long as it cannot recover its losses.”

Accuracy of Site C Budget Under Scrutiny 

Deloitte also warns that the accuracy of Site C’s budgeted major civil works contract compared to its actual value “raises concerns about BC Hydro’s ability to accurately estimate large contracts,” noting that other major contracts have yet to be awarded.

“Should these contracts have similar discrepancies between planned versus actual values, the Project contingency funds may be insufficient to cover them.”

Deloitte notes that none of the other Canadian hydroelectric and transmission line projects it examined were delivered on budget. Hydroelectric projects, including the Muskrat Falls dam in Labrador, were 55 to 90 per cent over budget, according to the report.

ICYMI: The Startling Similarities Between the Muskrat Falls Boondoggle and B.C.'s Site C Dam

Should the Peace River diversion proceed as originally scheduled in September 2019, Site C will either fall within budget or experience less than a ten per cent cost overrun, concludes Deloitte.

A one-year delay in the river diversion will boost Site C’s cost by ten to 20 per cent, for a final price tag of between $9.2 and $10 billion, prior to any draws on the project’s contingency fund.

Deloitte points out that more than $500 million out of Site C’s $1.2 million in contingency funds had been released as of June 2017, suggesting that new financial pressures could emerge if the fund is spent too quickly during the eight or nine year project.

The report found that a river diversion delay of more than one year will inflate Site C’s cost by up to 50 percent, for a final price tag as high as $12.5 billion.

When budgeted contingency funds are added to that price tag, the project’s final cost could reach over $13 billion under that scenario.

Deloitte also says that lower than planned Site C expenditures noted by BC Hydro can be explained by delays in starting some activities, slower than anticipated progress excavating materials and placing concrete, delays in highways, transmission and clearing work, and shifting of expenditures into future periods.

Image: Site C construction 2016. Photo: Garth Lenz | DeSmog Canada

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The Site C dam is an "economic, fiscal, environmental and aboriginal treaty rights disaster," according to former B.C. Premier Mike Harcourt.

In a letter submitted to the B.C. Utilities Commission, which is currently reviewing the $8.8 billion project, Harcourt said Site C will “severely damage BC Hydro and B.C. credit ratings” and lead to increases for ratepayers across the province.

Harcourt, who first voiced opposition against Site C in late 2016, said a recent study from Oxford University that found worldwide hydro projects see average cost overruns of 90 per cent should be a warning to B.C.

“What a coincidence both recent BC Hydro transmission lines have recently seen 90 per cent cost overruns,” Harcourt wrote to the commission.

He estimates “Site C will cost $15 to $17 billion.”

Site C’s price tag has increased by 33 per cent. In 2010, British Columbians were told Site C would cost $6.6 billion. That figured increased to $7.9 billion in 2011 and then to $8.8 in 2016.

Despite multiple requests and Freedom of Information submissions, DeSmog Canada has been unable to obtain an updated budget for Site C from BC Hydro.

ICYMI: Year-Long Wait for Site C Dam Budget Docs 'Disturbing': Expert

In a sit-down interview with DeSmog Canada last fall, Harcourt said it is never too late to stop a bad project from going ahead.

In the 1960s, when Harcourt was a lawyer representing the Chinese community in Vancouver’s Chinatown and Strathcona, the province cancelled plans to build an eight-lane freeway along Stanley Park.

“We stopped it cold,” Harcourt said, “that last part of that really bad idea.”

He added $200 million had already been pumped into construction of the freeways but stopping the project allowed Vancouver to become the city it is today, celebrated for its parks, walkable waterfronts and sustainability rankings.

“Proponents say it is too late, too expensive to cancel Site C because $1.5 billion has been spent,” Harcourt wrote to the commission. “I say it is better to cut losses.”

Harcourt points to an April 2017 report from the UBC Program on Water Governance that found cancelling the project could save B.C. between $500 million and $1.65 billion. 

Harcourt’s letter follows on the heels of a submission by former BC Hydro CEO Marc Eliesen who called for an immediate and permanent halt to Site C.

The decision to proceed with Site C, despite a clear need for the electrity it would produce and despite a failure to explore cheaper, less environmentally destructive alternatives, was “reckless and irresponsible,” Eliesen told the commission.

Letter from Former BC Premier Mike Harcourt Calls for Halt to #SiteC Dam https://t.co/FzYgUQRITQ #BCUC #bcpoli

— DeSmog Canada (@DeSmogCanada) August 23, 2017

“There never was a business case for the start-up of construction of Site C, and there is not a business case to support its continuation or postponement,” he wrote.

The BCUC has until September 20 to release a preliminary report and will make a final recommendation on the project on or before November 1.

Image: Former B.C. Premier Mike Harcourt. Photo: Zack Embree

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.