The Ontario Energy Board has rejected a request to immediately investigate Ontario Power Generation (OPG) for selling $5.5 million in clean energy credits to unidentified customers outside of the province.

The energy board is tasked with regulating the province’s electricity industry in the interest of ratepayers. In May, the non-governmental organization Environmental Defence asked the board to look into Ontario Power Generation’s sale of clean energy credits, which it has been doing without government oversight. The power company has declined to identify who purchased the credits or reveal any detailed information about the sales.

In May, Ontario Power Generation said the $5.5 million revenue it earned from these sales was immaterial. In an August 25 letter to Environmental Defence lawyers it published online, the energy board agreed. Mary Ellen Beninger, a spokesperson for the board, told The Narwhal that for a company the size of Ontario Power Generation, a review would be more likely for transactions of at least $10 million.

Each clean energy credit represents one megawatt-hour of electricity from carbon-free sources that businesses and consumers can buy to meet pollution reduction targets or commitments. Environmental Defence called for an investigation into whether it was legitimate for the power generator to profit from selling what the conservation group believes to be public assets. Environmental Defence also asked the board to review how the company used the revenue.  

Other environmental organizations and the City of Ottawa wanted an investigation as well. In a separate letter to the board, Ottawa’s environment manager, Mike Fletcher, said the city was concerned these sales were “removing the environmental attributes from the electricity our community consumes” and increasing emissions from electricity.   

In her letter last week, the board’s chief commissioner, Lynne Anderson, wrote that it would be “premature” for her organization to explore Ontario Power Generation’s sale of emissions credits right now because the provincial government has decided to explore creating a registry.

Ontario currently has no official, centralized registry to sell clean energy credits. In May, The Narwhal broke the story that Ontario Power Generation had been selling credits outside of the province regardless. 

Soon after, in June 2022, Energy Minister Todd Smith instructed the Independent Electricity Systems Operator to look into creating a voluntary registry. It would legitimize sales of clean energy credits by all of the energy generators in the province and create a public accounting system. Ontario Power Generation, which is the province’s largest generator, has agreed to be regulated under such a system if it comes into place. 

The government’s public consultation on this system, which it is obligated to do by law, began in August and is open for comments until September 16. 

In her letter, Anderson said the Ontario Energy Board will monitor the government’s consultations, which she believes will be adequate for collecting public comment on sales like the ones made by the power generator. She said the issue of how revenue from such sales should be used is also within the scope of the government’s consultation, as is the issue of how clean energy credit sales should be reported, tracked and used.

Beninger told The Narwhal “there may be other matters for the OEB to consider” once the government’s consultations are over. “For example, there may be value in a [clean energy credit] reporting requirement for utilities,” she wrote in an email.

On Friday, the energy board released a series of questions it had posed to Ontario Power Generation after the calls for an investigation, with responses. Sent in July, the power generator’s answers were echoed in the energy board’s recent letter — Ontario Power Generation stated that the government consultations precluded decisions about how it would use the $5.5 million in existing revenue and how it would sell credits or manage revenue in the future. The generator also told the board that if the government did not provide any clear direction, it would propose its own regulatory process for approval.

“Such a mechanism would only address future revenues,” Ontario Power Generation told the board.

Beninger did not directly answer The Narwhal’s questions about whether it has a responsibility to ratepayers to ensure that these sales did not undermine Ontario businesses and municipalities which are calculating their own output of greenhouse gases based on an assumption that the province has a virtually emissions-free grid.

Anderson wrote that the board considered establishing “a new deferral or variance account to track any OPG revenue from the sale of [clean energy credits], but has determined that doing so at this time is not warranted.” 

“Again, these are matters best considered after completion of the Government’s consultation,” Anderson wrote.

Palmer Lockridge, a spokesperson for Energy Minister Todd Smith, told The Narwhal the minister is aware of the board’s decision. He said the proposal for the registry would allow the minister “to direct how revenues from [clean energy credits] for Ontario Power Generation should be used, including the future development of new clean energy in the province, and returning value to ratepayers.”

Kent Elson, a lawyer for Environmental Defence, said he hopes Ontario’s auditor general will investigate these sales. “We have not seen a commitment from OPG to stop or hold off on these sales,” Elson said. “That’s really concerning.”

“These continued sales could be making things worse by giving companies an excuse to keep on polluting,” Elson said.

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Ontario Power Generation made $5.5 million selling clean energy credits in a private revenue-making scheme, according to a regulatory document obtained by The Narwhal.

The $5.5 million figure was listed in documents filed with the Ontario Energy Board (OEB) in May, the day after The Narwhal disclosed the sales of the unregulated credits. At the time, the power company hadn’t publicly announced its credit sales. The energy board regulates the province’s electricity industry and is currently investigating Ontario Power Generation’s revenue-making scheme.

In the May letter, Ontario Power Generation deemed the $5.5 million sales figure “immaterial revenues.” Although it confirmed the amount to The Narwhal, the company has been secretive about its program, declining to answer questions about how it used the money, who purchased the credits and whether it was still in the business of selling the credits to customers. 

The absence of immediate answers appears to show how the company can operate without adequate oversight, and profit from province’s largely clean grid at the expense of Ontarians.

Clean energy credits are guarantees that one megawatt-hour of electricity comes from carbon-free sources like hydro, wind, solar and nuclear. Purchasing them allows businesses and consumers to claim that a certain amount of their energy comes from green sources, thus satisfying their environmental and sustainability commitments. Previously, the company told The Narwhal that its credits are based on its production of hydroelectricity.

Ontario has no official, centralized registry to track purchases of clean energy credits for electricity. The registry Ontario Power Generation has created is similar to voluntary registries that exist in more than a half-dozen U.S. states including Ohio, Pennsylvania, Illinois, Indiana and Wisconsin.

Kent Elson — a lawyer who represents the non-governmental organization Environmental Defence at Ontario Energy Board hearings and who first asked the board to investigate the sales  — told the board that Ontario Power Generation’s private credit sales could equate to approximately 6 million megawatt hours of clean energy or almost 10 per cent of the generator’s energy output. 

Ontario’s electricity grid is 94 per cent emissions free — a fact widely publicized by the power generator and the government for years. This fact forms the basis for all the emissions accounting done by Ontario municipalities and businesses. But regulators are failing to monitor whether credits sold by Ontario Power Generation to markets outside the province represent emissions-free energy that’s also being counted towards sustainability goals by locals — whether the credits are actually offsetting pollution from the buyers, or whether these buyers are paying for hot air. 

An Ontario Power Generation executive previously told The Narwhal in an interview that there is no double-counting of these credits, noting the sales are “tracked and monitored carefully” through third-party brokerage systems. 

In its May 6 letter to the energy board, Ontario Power Generation said revenue from these sales “will either flow back to ratepayers or be used to support future clean energy projects.” No evidence has been provided to The Narwhal to show this has occurred.

“The OEB is carefully considering this matter and we will be prepared to comment further at the end of our process,” Mary Ellen Beninger, a spokesperson for the board, said in an email. Beninger did not specify what the timeline of the investigation is. 

While the investigation continues, Ontario’s re-elected Progressive Conservative government is pushing forward with its plan to create a voluntary clean energy credit registry that would legitimize these sales and create a public accounting system for them. Ontario Power Generation has agreed to track its sales in this registry once it exists.

In August, Ontario posted the proposal for the registry for public feedback, as it is legally required to do. Its proposal outlines that the registry would require generators to register to certify their clean energy production, after which each sale would be tracked and each credit retired afterwards, so that environmental credits are not resold, or counted more than once. The province’s goal is to monetize Ontario’s existing emissions-free energy while also incentivizing new clean energy generation. 

In an email to The Narwhal, Palmer Lockridge, a spokesperson for Ontario’s energy minister, Todd Smith, said this type of registry is “a proven tool, used across North America and Europe, which would allow businesses to demonstrate that their electricity has been sourced from a non-emitting resource, while supporting the future development of new clean energy generation in the province and providing value to ratepayers.”

“Establishing a common registry to track the creation, trading, and retirement of all [clean energy credits] produced and consumed in Ontario will ensure transparency, accountability and preserve the cleanliness of Ontario’s electricity supply,” Lockridge wrote. 

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Two top B.C. civil servants, including the senior bureaucrat who prepares Site C dam documents for cabinet, knew in May 2019 that the project faced serious geotechnical problems due to its “weak foundation,” according to documents obtained by The Narwhal.

Energy ministry assistant deputy minister Les MacLaren and deputy finance minister Lori Wanamaker also knew the following month that the over-budget project had almost exhausted its $858 million contingency fund, a likely sign of another cost overrun, according to the documents, which were released under B.C.’s freedom of information act.

Yet British Columbians — the owners of the publicly funded dam on the Peace River — didn’t learn about the project’s escalating troubles for more than a year, until Energy Minister Bruce Ralston held a brief press conference on July 31, the same day BC Hydro released overdue Site C dam reports. 

The belated BC Hydro reports said the Site C dam faces unknown cost overruns, schedule delays and such profound geotechnical troubles that its overall health is now classified as “red” — meaning it is in serious trouble. 

In late January, The Narwhal submitted a freedom of information request to BC Hydro, asking for all Site C project assurance board agendas, minutes, reports and recommendations.

Premier John Horgan created the project assurance board in December 2017 after his government approved the dam and added another $2 billion to the project budget. But the NDP government subsequently refused to release any of the board’s findings or a list of its members. 

Following an appeal to the Office of the Information and Privacy Commissioner after BC Hydro missed a legal deadline for responding, we received 2,247 pages of documents almost seven months after filing the request.

(The Narwhal is releasing the FOI response in its entirety to the public and it can be accessed at the following links: Part 1, Part 2, Part 3, Part 4, Part 5.)

The documents reveal new information about the dam’s geotechnical struggles and raise troubling questions about who in government knew about the project’s climbing costs and deepening geotechnical woes, when they knew it and why the information was not made public.

Key sections of the documents, including information pertaining to rising cost pressures and the severity of key project risks from January 2018 to January 2020, are redacted. 

Even so, the documents paint a picture of a project rife with growing geotechnical issues and risks as well as safety and quality concerns — and facing a rising risk of cost overruns and schedule delays — long before the COVID-19 pandemic shut down much of the province and temporarily scaled back the Site C dam workforce in mid-March. 

On Sept. 1, 2019, for instance, nearly one year before the public learned of significant problems and a soaring price tag for the Site C dam, BC Hydro submitted a weekly status report to the assurance board listing the overall health and cost of the dam’s main civil works as “red,” meaning the civil works — the dam structure, generating station and spillways — were in deep trouble.

 ‘A matter of grave public concern’ 

Harry Swain, who chaired the joint review panel that examined the Site C project for the federal and provincial governments, said it is “anomalous” that project assurance board reports have been kept secret by the B.C. government until now and key information is still being withheld. 

“This project is proceeding in doggone secrecy that just is not at all common in large public projects of any kind,” Swain, a former federal deputy minister, told The Narwhal. 

“This is a matter of grave public concern and we, as taxpayers or ratepayers, are going to wind up paying a heck of a lot of money for it,” said Swain, who was also Canada’s director general for electricity and the country’s first senior advisor for renewable energy.

“It looks like we’re going to lose $10.7 billion on this project. That would take care of the homelessness problem, unequitable incomes, First Nations health and several other things, all at once.” 

In July, when BC Hydro released the overdue reports, the public utility said it didn’t know when the Site C dam — slated for completion in 2024 — will be finished or how much it will cost beyond its current $10.7 billion budget. 

BC Hydro also said it hasn’t figured out how to resolve grave geotechnical issues, which require shoring up the unstable foundation of the earthen dam, powerhouse and spillways. 

Site C project assurance board documents reveal an important meeting took place at the end of May 2019, when the Site C dam technical advisory board — a panel of engineering and construction experts — convened in Fort St. John and Vancouver over a three-day period. 

A list of the meeting attendees is redacted, but the documents show a de-briefing was conducted with BC Hydro executives and project assurance board members on May 31, 2019. 

Premier John Horgan created the Site C project assurance board in December 2017. But the NDP government subsequently refused to release any of the board’s findings or a list of its members. In late January, The Narwhal submitted a freedom of information request to BC Hydro, asking for all Site C project assurance board agendas, minutes, reports and recommendations and received 2,247 pages of documents about seven months later. Photo: Jayce Hawkins / The Narwhal

Stability of the dam ‘a significant risk’ 

The main objective of the three-day meeting was to assess progress and performance on the Site C project, as well as to assess design-related risks. The primary area of focus was the main civil works — the dam structure, powerhouse and spillways — according to the documents. 

The technical advisory board found the stability of the dam is “a significant risk and the hazards associated with the weak foundation have been adequately recognized.” 

“We’re talking about a possible lack of stability under the dam itself,” U.S. energy economist Robert McCullough said in an interview.

“Literally, if we look at some of the academic articles that have been written about this, we could be talking about a dam that’s going to crack or slide in the case of an earthquake,” said McCullough, a former officer for a large hydroelectric facility in Portland, Oregon, who has studied the Site C project extensively. “Since there are earthquakes in this part of the world, this is a very important issue.” 

The Site C project is located in a geographical area filled with faults that can become critically stressed during fracking operations, which are poised to expand significantly in the region to supply gas for the LNG Canada export project. In 2017 and 2018, more than 10,000 earthquakes occurred in the wider area, including one that shook the Site C dam construction site in November 2018, forcing workers to evacuate. 

The advisory board also said the Site C dam’s design — changed to an unconventional L-shape, much to the concern of retired BC Hydro engineer Vern Ruskin — needed to be checked. 

It outlined seven steps for BC Hydro to follow, including calculating “the factor of safety” at the end of construction and again at the end of reservoir filling, and requested an update at its next meeting. 

“They’ve gotten pretty het up over this,” McCullough said. “This is a tone that says ‘you’ve got to do a ton of work right now, and we want to hear back that you’re doing it.’ Some of these things are pretty major.”

B.C. ministers likely aware of escalating problems

According to the documents, the Site C project assurance board has an “oversight function to help ensure that the project is completed on time and on budget, and that risks are appropriately identified, managed and reported on an ongoing basis.” 

Swain said the assurance board, despite its moniker, is not an oversight board. He described it as “pretty much an emanation of BC Hydro, with a few additions.”  

“That is a management board,” he said. “If you’re going to have some kind of oversight or project assurance you want some really independent people. You want to have a few experts — particularly geotechnical ones — who have a lot of experience around the world and have no interest in further employment by BC Hydro. They’re really independent in that sense.”

MacLaren, the long-time assistant deputy energy minister who prepares Site C documents for cabinet and reviews BC Hydro’s quarterly Site C progress reports to the B.C. Utilities Commission, is one of two government representatives on the board. 

The other representative is Wanamaker, who in 2017 challenged the commission’s final findings about the Site C project in a six-page letter to the commission that seemed to suggest the new NDP government was searching for a rationale to continue the project.  

The independent commission found the Site C dam’s final price tag could exceed $12 billion and the same amount of energy could be produced by a suite of renewables, including wind, for $8.8 billion or less. It also found that BC Hydro had a historical pattern of over-forecasting energy demand. 

According to documents on BC Hydro’s website, the project assurance board is at the centre of Site C dam communications among BC Hydro’s board of directors, the energy ministry, and treasury board and/or the finance ministry. 

Swain said it would be “strange” if MacLaren and Wanamaker had failed to inform their ministers — then Energy Minister Michelle Mungall and Finance Minister Carole James — about mounting problems with the Site C project during 2019.

“It strikes me as highly unlikely that the most senior officials in those departments and the ministers would be unaware of the developing difficulties,” Swain said. 

Harry Swain chaired the panel that reviewed the Site C dam on behalf of the provincial and federal governments. He says it’s “highly unlikely” that government the ministers would have been unaware of the escalating construction difficulties at the Site C dam. Photo: Jayce Hawkins / The Narwhal

An ‘egregious’ problem with oversight for Site C and Muskrat Falls dams

For David Vardy, the retired chair of Newfoundland’s public utilities board, the Site C project’s lack of transparency and escalating costs create a sense of déjà-vu.

The failure to disclose the Muskrat Falls dam’s rising costs to ratepayers was a front-and-centre issue in Newfoundland, where the over budget dam on Labrador’s Churchill River will require a bail-out from federal taxpayers to avoid a minimum 50 per cent increase in provincial hydro rates.  

An inquiry into the $12.7 billion Muskrat Falls project examined why the provincial government didn’t cancel the uneconomic project when there was still time. 

The inquiry’s scathing report, released in March, found executives at the Crown corporation responsible for building the dam “frequently took unprincipled steps” to secure approval of the project, while governments were “determined to proceed” through a lens of political bias.

Since the inquiry, the cost of the Muskrat Falls dam has climbed again, to $13.1 billion, and Vardy predicts another $1 billion will be added to the tab before the dam becomes operational at least three years behind schedule.  

“I think there’s an egregious problem with oversight on the two projects,” Vardy said in an interview. “If anything, it almost appears in some respects that Site C oversight is not as good as what we’ve had here.”

Vardy said it would have made “all the difference in the world” if ratepayers in both provinces had been apprised of rising costs earlier. “They [Crown corporations] are in the same camp of misrepresenting their costs to the public and misrepresenting to the public what’s going to happen at the end of the day. It’s bad public policy because you don’t have transparency.” 

The Site C project assurance board documents beg the question of who has been looking out for the public interest in B.C. since the board began meeting in January 2018, using weekly information from BC Hydro to review expenditures and progress on the dam. 

The Muskrat Falls Dam pictured here under construction in April 2018 was the subject of a public inquiry due to the project’s high costs. “If anything, it almost appears in some respects that Site C oversight is not as good as what we’ve had here,” said David Vardy, the former chair of Newfoundland’s public utilities board. Photo: Nalcor Energy

Project assurance board voted to increase SNC Lavalin’s contract 

The assurance board is chaired by John Nunn, the former chief project engineer for the Site C dam and a BC Hydro director since January 2020.

Nunn worked for the Vancouver-based engineering and consulting firm Klohn Crippen Berger, a major donor to the BC Liberal Party.  

Along with embattled engineering giant SNC Lavalin, also a major donor to the BC Liberal Party, Klohn Crippen began to receive direct award Site C contracts after former Premier Gordon Campbell announced in 2010 that the project would proceed to review. (Donations to political parties by corporations and unions were banned in B.C. after the NDP took power in 2017.)

Direct award contracts — which are prohibited by the federal government if they are larger than $25,000, unless they are needed for special justifications such as a national emergency — allow BC Hydro to decide which companies get contracts instead of going through a more transparent and competitive tender process. 

The documents show the BC Hydro board of directors approved the retention of the two firms to design core components of the Site C dam in November 2014, the month before the former BC Liberal government announced the project would proceed. 

Klohn Crippen was given a direct-award Site C contract for $104 million to design essential components of the dam, including the main civil works, generating station and spillways, according to the documents. 

SNC Lavalin received a direct award contract for $131 million, also to design core components of the dam. 

The core components of the dam are now in question due to the lack of solid ground on which to anchor the dam structure, powerhouse and spillways — an issue flagged years ago by both SNC Lavalin and Klohn Crippen as a potential project risk. 

In February 2019, with geotechnical issues an ongoing concern, the project assurance board authorized an “increase” to the Site C engineering design service agreements with Klohn Crippen and SNC Lavalin, the documents disclose.

The amount of the increase is redacted from the documents, which show Nunn abstained from the vote due to his prior working relationship with Klohn Crippen. 

On July 31, well over a year after the assurance board approved additional funds for SNC Lavalin and Klohn Crippen, BC Hydro reported to the B.C. Utilities Commission that “the foundation enhancement costs are expected to be much higher than initially expected.” 

The third-generation Boon family farm sits within the 128 kilometres of river valley that is set to be flooded for the Site C dam. Photo: Garth Lenz / The Narwhal

Assurance board hired ‘independent’ engineer from company represented on board

Also on the Site C project assurance board is Joe Ehasz, the California-based program manager for AECOM Energy & Construction, a company that had received $225,000 in Site C dam contracts by May 2017. 

In August 2019, according to records obtained by The Narwhal through a separate freedom of information request, the company’s subsidiary AECOM Technical Services also received a $132,000 Site C dam contract to provide an “independent construction advisor” for the project.

Board members include three other BC Hydro directors, Concert Properties CEO David Podmore and Lorne Sivertson, an energy consultant and the author of a pro-Site C report for B.C. construction trade unions that was used to discredit the utility commission’s findings.

The documents show MacLaren and Wanamaker were privy to a January 2018 report from the project’s technical advisory board that described construction schedules as “aspirational” and identified geotechnical stability issues as a risk that could further impede progress building the dam.

In a report for the project assurance board one year later, covering the week ending Jan. 25, 2019, BC Hydro points to the most serious geotechnical issue plaguing the project today — the lack of solid ground on which to anchor the dam structure, powerhouse and spillways — as a topic of discussion in a conference call with the project’s technical advisory board.

Site C dam construction on the Peace River. Photo: Garth Lenz / The Narwhal

The design team presented information on the “small amount of movement on a bedding plane” and “the compression of the foundation from powerhouse buttress loading,” the report noted.

The site where the dam is being built contains “bedding planes” between layers of sedimentary shale that have poor shear strength, meaning they could suddenly shift under modest amounts of force. The site, in Swain’s words, is composed of “relatively youthful and unpetrified sediments, some of which appear in the form of weak shales, mudstones, siltstones and some of which appear in the form of clay.” 

“Those sedimentary muds and rocks and clays and whatnot are known to react quite alarmingly either in the presence of a lot of water or a lot of dryness,” Swain said. 

“They swell and shrink. They move around. It’s not the sort of geology that you’d really want to go out and put a multi-million tonne dam on, or even a roller compacted concrete powerhouse.” 

Swain said he was puzzled by BC Hydro’s re-design of the dam to an L-shape after the joint review panel assessed the project.

“I think we’re finally seeing some kind of response to the question of why the heck did they [decide to] build an L-shaped dam when nobody’s ever done that in the world before.” (BC Hydro has pointed to several examples of L-shaped dams around the world, but those dams are not earthfilled like the Site C dam.) 

“The suspicion is that the initial placement of the powerhouse was found to be over an especially weak spot,” Swain said. “By turning it 90 degrees, they thought they would avoid the problem. It appears that they may not have.”

Site C dam’s civil works in serious trouble almost one year before public disclosures  

On Sept. 12, 2019, nearly one year before the public learned of the project’s rising price tag, BC Hydro informed the assurance board that geotechnical risks were “likely,” potentially increasing costs and causing a schedule delay. BC Hydro also warned of the “likely” risk of additional engineering costs. 

The severity and probability of those costs were redacted from the documents, along with contingency cost pressure items. But by Sept. 1, 2019, according to the documents, the entire contingency fund had been spent, with five years of construction still ahead. 

BC Hydro also said there was a “likely” risk that Highway 29 budgets are “based on incomplete designs, with limited construction market data.” To accommodate the Site C dam’s reservoir, about 30 kilometres of the highway in six different sections, including four bridges, will have to be relocated.

Dam spillway costs would increase materially due to design changes and reservoir clearing costs would be higher than allocated for in the budget, the assurance board also learned. The severity, probability and cost of those risks were redacted from the documents.

Nine days later, a Sept. 21, 2019 report from Steve Summy, the AECOM “independent construction advisor” — a position created by the project assurance board — flagged safety, quality, schedule and cost issues on the project’s left bank. 

Key parts of Summy’s conclusions are redacted from the documents. However, Summy zeroed in on the “poor” quality of the finished surface in the river diversion tunnels, recommending a finishing crew begin work as soon as possible. He cautioned against “pressure to accept a substandard product to finish on time” and noted the application of shotcrete — sprayed concrete — in the tunnels was “inconsistent.” 

By Sept. 1, 2019, the Site C dam’s entire contingency fund had been spent, with five years of construction still ahead, according to documents obtained by The Narwhal. Photo: Jayce Hawkins

Six ‘significant’ technical risks identified 

The May 2019 report from the technical advisory board — shared with BC Hydro executives and the project assurance board members on May 31 of that year — identifies six “significant” technical risks. 

They include the “stability of the earthfill dam and tailrace wall,” described as a “significant risk due to the weak foundation” in a 15-page report that recommended seven steps to check the project’s design and calculate the factor of safety. 

A second risk is the right bank foundation, which forms the shorter arm of the radically re-designed L-shaped structure. Structures on the right, or south, bank of the Peace River include the power house, spillways and earthfill dam. 

The technical advisory board noted “the hazards associated with various ground defects affecting stability have been correctly identified” on the south bank “as have risk mitigation efforts based on seepage control and drainage.” 

But a greater effort was required, the board said. Those efforts should include making it a “high priority” to develop a hydrogeological model of the right bank to determine how the bank would respond to reservoir filling, the board said. 

The technical advisory board also flagged the earthfill dam foundation and grouting as a significant risk.  

The stability of slopes and foundation at the dam site could potentially be “decisively” affected by hydrogeological conditions and phenomena, the technical advisory board noted. 

“Simple flushing of a borehole has immediately raised the groundwater levels in an extensive section of the right abutment and has caused displacements on bedding planes. Rainfall has triggered similar effects.”

The Site C dam is being built in an area that contains “bedding planes” between layers of sedimentary shale that have poor shear strength, meaning they could suddenly shift under modest amounts of force. Photo: Jayce Hawkins

For the grout, “options for responses to approaching risks are more limited,” the board noted. “Especially in the right abutment, groundwater levels rising with the lake are capable of jacking open the existing stress relief features and, in this process, not only raising the hydraulic load on the curtain but also, in the worst case, damaging the curtain by hydrojacking.”

As a precaution, the board says grouting could be performed to obtain a “safe pre-stressing of the rock mass against the hazard of hydrojacking.” 

“Such measure has positive precedent but meets with difficulties imposed by the geological and geotechnical conditions prevailing at Site C…” the board noted.

A further risk is the thermal performance of roller compacted concrete and cracking. Cracks in the roller compacted concrete have “been recognized and studies are underway to evaluate their extent and significance,” the board noted.   

“If, ultimately, substantial grouting is necessary to repair such cracks, a complex and costly program could result,” the board said, adding it wished to be kept informed on progress “associated with managing this risk.”

Neither BC Hydro nor the B.C. government are responding to media questions during the provincial election campaign, unless inquiries pertain to health and safety or statutory requirements. 

Calls for independent safety review, cancellation

If completed, the Site C dam will flood 128 kilometres of the Peace River and its tributaries, putting Indigenous burial sites and traditional hunting and trapping grounds, some of Canada’s best farmland and habitat for more than 100 species at risk of extinction under up to 50 metres of water. 

Swain and others — including members of the Peace Valley Landowner Association and residents of the community of Old Fort, downstream from the Site C dam  — are calling for an independent safety review of the project. Swain said the safety review should follow investigations by independent geotechnical engineering experts. 

“I strongly believe that BC Hydro and the government should pause the construction, do that work and then take another decision,” Swain said. 

“That’s entirely aside from the economics of the case which have been abysmal for some time and are getting worse.” 

Forest in the Peace River valley in the Site C dam flood zone. Photo: Garth Lenz / The Narwhal

Two new expert reports, including one written by McCullough, conclude British Columbians will save money if the Site C dam is immediately cancelled by the new provincial government following the Oct. 24 election. 

McCullough’s report, commissioned by the Peace Valley Landowner Association, said the dam will conservatively cost an additional $2.1 billion and ratepayers will save an initial $116 million a year if the project is scrapped and the same amount of energy is procured from other sources. 

An “intelligence memo” from the C.D. Howe Institute, addressed to B.C.’s upcoming new government, says the case for the Site C dam is “getting weaker” and any meaningful cost increase makes cancellation the best choice.

The documents show the Site C project had spent $3.5 billion of its budget by March 31, 2019. The latest figures show $5 billion has been spent. But McCullough, Swain and Vardy all point out the only cost the government should consider is the one to come.

Ralston announced in July that the government has appointed Peter Milburn, a former deputy minister of finance and secretary to the Treasury Board, as a special Site C project advisor who will work with BC Hydro and the Site C project assurance board to examine the project and provide the government with independent advice.

But whether or not Milburn’s findings will be made public remains to be seen. 

McCullough said Milburn’s appointment underscores the problem of “who guards the guards.” 

“Normally, in a construction project, you want as clean a chain of command as possible,” he said. “In this case it would be the premier at the top, then the chairman of the board of BC Hydro and then the engineers at the bottom.” 

But in the case of the Site C dam, McCullough said there’s “a cloud of committees and cross-committees watching each other.” 

McCullough said the Site C dam’s geotechnical challenges call for “the simplest and most direct and most hands-on management, and what we have is a committee of committees.” 

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The Site C dam project is facing unknown cost overruns, schedule delays and such profound geotechnical problems that its overall health has been classified as “red,” meaning the project is in serious trouble, according to two overdue project reports released by BC Hydro on Friday.  

BC Hydro and B.C. Energy Minister Bruce Ralston blamed the COVID-19 pandemic for the Site C project’s deepening woes.

Yet BC Hydro’s own reports show the project was facing significant cost and scheduling pressures long before the pandemic emerged in B.C. On March 18, B.C. declared a state of emergency, but the province deemed the Site C dam an essential service, allowing work on the $10.7 billion project to continue. 

According to the reports, as of December BC Hydro was already scrambling to deal with formidable geotechnical issues on the Peace River’s notoriously unstable right bank, which is intended to provide the foundation for the project’s powerhouse, spillway and future dam. The reports said the magnitude of the geotechnical issues has become increasingly apparent this year. 

If the issues cannot be quickly resolved, BC Hydro will miss a critical fall deadline for diverting the Peace River in order to build the dam structure. BC Hydro previously said missing the river diversion deadline could cause a one-year schedule delay and add substantially to the Site C budget. 

“I don’t think it’s credible [to use the pandemic] in explaining what’s happened so far,” said Harry Swain, chair of the panel that examined Site C for the provincial and federal governments. 

Swain said significant problems with foundation conditions under the right bank have been known for at least two years, giving BC Hydro plenty of time to update the project’s cost and schedule.

“BC Hydro is concealing information or the government is not asking for it,” Swain told The Narwhal. 

Harry Swain chaired the panel that reviewed the Site C dam on behalf of the provincial and federal governments. Photo: Jayce Hawkins / The Narwhal

One of the progress reports, which also contains the Site C annual report, covers the three-month period ending December 31, 2019. The second report covers the period ending March 31, 2020. 

Former BC Hydro president and CEO Marc Eliesen said while the pandemic will no doubt have a serious impact on the Site C project’s schedule and cost, a number of significant financial pressures either pre-date the pandemic or are unrelated to it. 

“Given the performance by BC Hydro in managing and administering this particular project right from the start, it’s been nothing but a series of financial errors and lack of quality management and evaluation of the project,” said Eliesen, also the former chair and CEO of Ontario Hydro and former chair of Manitoba Hydro.

Along with other independent energy experts, Eliesen and Swain have warned for years that the Site C project should never have proceeded and will incur crippling costs. 

“A number of us over the years have commented on what we thought was going to take place and, in fact, it is taking place,” Eliesen told The Narwhal. 

Both he and Swain predict the Site C project will cost more than $12 billion — a figure that aligns with the findings of a fast-tracked 2017 review of the project’s economics by the independent B.C. Utilities Commission.

The review also found the same amount of electricity could be produced by other renewables, including wind power, for $8.8 billion or less, the price tag when the former Liberal government granted final approval in December 2014. 

The Site C dam will flood 128 kilometres of the Peace River and its tributaries, forcing families from their homes and destroying Indigenous gravesites, some of Canada’s best farmland and habitat for more than 100 species at risk of extinction.

The dam is the largest publicly funded project in B.C.’s history.

Sunset on the Peace River, which will be flooded for the Site C dam. Photo: Byron Dueck

In January, The Narwhal reported that the Site C dam project was poised for more cost overruns and schedule delays despite repeated assurances from B.C.’s NDP government that the project would be delivered on time and within its revised budget. 

BC Hydro’s unusually frank quarterly report to the B.C. Utilities Commission, filed on Jan. 15 and covering the period up to June 30, 2019, revealed significant problems with the dam amidst the typically positive project updates.

Some of the more serious issues included “significant cost pressures and/or budget increases” since the NDP government approved an additional $2 billion for the project in Dec. 2017 and a September cost risk analysis showing the revised project budget was already “under pressure.”

During a press conference on Friday, Ralston said he is “very concerned” by the latest BC Hydro reports.

“These reports provide a first glimpse into how Covid-19 has caused uncertainty for the project’s schedule and added cost pressures to its budget,” Ralston said. 

“The ongoing pandemic has added to the challenges already facing the project.”

B.C. Minister of Energy, Mines and Petroleum Resources, Bruce Ralston. Photo: Province of British Columbia / Flickr

Ralston announced the appointment of Peter Milburn — a former deputy minister of finance and secretary to the Treasury Board— as a special Site C project advisor who will work with BC Hydro and the Site C project assurance board to examine the project and provide the government with independent advice.

Premier John Horgan announced the creation of the project assurance board in December 2017 when the NDP greenlighted the Site C dam, saying the board would provide oversight to ensure the project stayed on schedule and within its newly revised $10.7 billion budget.  

A complete list of board members and the board’s findings and reports have been kept secret. 

In January, The Narwhal submitted a Freedom of Information request to BC Hydro asking for all assurance board meeting agendas, minutes, reports and recommendations. But BC Hydro has not provided a response to the FOI request, even though deadlines for answering have passed. 

Eliesen called Milburn’s appointment “déjà vu,” noting the project assurance board was supposed to provide that oversight and advice. Swain said the appointment “appears to be a confession” that the project assurance board isn’t working. 

“But how can we tell, because of course nothing they have ever reported has become public,” Swain said. “Adding yet another layer of oversight smacks of desperation.”

“Peter Milburn is well-qualified but has to cope with the government’s incomprehensible decision in 2017 to continue with a project that all evidence showed was already seriously underwater.”

At a short telephone news conference that allowed only a few questions from selected reporters, Ralston did not directly answer a question about whether Milburn’s findings would be made public.  

“We are still subject to the mushroom farm treatment,” Swain said. “Everything is done in the dark and you pour a lot of horse piss on it.” 

Swain said it’s long past time for the government to be upfront with BC Hydro residential ratepayers about the true cost of the Site C dam, given large discounts for BC Hydro’s industrial customers. He said the Site C project, coupled with the costs of contracts with independent power producers, will raise hydro rates substantially.

“The government must have studied these numbers to death but dares not release them a year before an election. It’s too late to blame this coming calamity on the Liberals, as the NDP fully own this project now.” 

Slash piles on an island in the Peace River, which as been logged in advance of flooding for the Site C dam. Photo: Byron Dueck

Green Party interim leader Adam Olsen said the Site C project should not be given a blank cheque to proceed at any cost imaginable and the NDP should “seriously consider” cancelling the project.

“The NDP needs to be clear about the price and make a decision before river diversion takes place and we change the flow of the Peace River forever, which is scheduled for this fall. We will be holding this government accountable for the next moves they make,” said Olsen, MLA for Saanich-North and the Islands.

“I’m concerned that the government is saying Site C is past the point of no return, while admitting that they don’t know the current state of the project,” Olsen said. 

“This leaves B.C. ratepayers at significant risk.”

The Site C dam was approved in December 2014 by Christy Clark’s BC Liberals, after the government changed the law to remove the watchdog B.C. Utilities Commission from determining if the project was in the public interest.  

 Preliminary clearing and construction work for the project began in July 2015, and Clark famously vowed to push the project “past the point of no return.” 

A before and after photo of the Peace River valley, which has been logged before flooding for the Site C dam. Photo: Garth Lenz

Warning signs of future cost overruns and schedule delays were apparent only eight months after preliminary construction started, yet BC Hydro continued to issue press releases saying the project was on time and on budget.

By the end of March 2016, BC Hydro had already spent more money than projected and missed key benchmarks. 

In 2018, international hydro expert Harvey Elwin testified that the Site C dam faced an “extremely high probability” of at least a one-year construction delay. Elwin, who has held major leadership roles with large multinationals working on hydroelectric projects around the world, was an expert witness in a First Nations application for an injunction to halt work on the dam pending the resolution of an on-going legal case. (That injunction was denied, but the legal case continues.)

Elwin wrote a 196-page report identifying seven major issues responsible for existing and future construction delays on the dam.

“Traditionally, there are major risks in dam and hydroelectric projects, especially when they have complex and challenging geology and foundations like the Site C project,” Elwin noted. 

Elwin also described the secrecy surrounding the Site C project as “extraordinary,” saying he had never encountered anything like it in five decades of working on major hydro projects around the world, including the Three Gorges dam in China.

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.

Some discomforts of the Yukon winter don’t last long — a car that just won’t start, a parka that’s frozen stiff. Others, however, carry over to following years.

The 2018-19 winter in Yukon was dry and frigid. Snowpack hit a near-historic low as a result, leading to low water levels in the reservoirs that drive the territory’s hydro electricity plants. 

Because the territory’s grid is heavily reliant on hydro, Yukon Energy has been forced to use more diesel fuel this year. 

Now, with climate change expected to make weather patterns even more volatile, the utility said it’s making moves to diversify the grid.

Yukon looks to up diversity and efficiency in energy

According to a Yukon Energy fact sheet, the Whitehorse reservoir had just 51 per cent of its normal snowpack levels in 2019. 

The Mayo and Aishihik reservoirs fared much worse, with 31 per cent and 21 per cent of normal snowpack levels, respectively.

“The last time we had numbers like that was in the late ’90s,” said Andrew Hall, president and CEO of Yukon Energy. He added natural gas has been burning steadily since November to make up the difference. 

And when an LNG generator broke down earlier this month, more diesel ended up being used to compensate for that lost capacity.

Snowpack levels influence the amount of running water available for hydro plants the following year. Source: Yukon Government. Graph: Carol Linnitt / The Narwhal

Because of the lower water levels in the reservoirs, Yukon Energy estimates roughly 16.5 gigawatts of energy will need to be generated using fossil fuels in April and early May.

“That’s around the same amount of electricity 16,500 Yukon homes would use in a month,” the utility’s fact sheet states, “or about three per cent of the total amount of power we will likely need to generate this year.”

The sheet also notes 72 per cent of that power is being generated by natural gas, while diesel powers the rest.

 Hall said climate change could actually mean more warm weather with higher levels of precipitation in the territory. But the problem is rainfall is hyperlocal, meaning Whitehorse may get a lot, while Carmacks, a roughly two-hour drive north, gets a fraction of it.

“It’s a variable we don’t have a good handle on,” he said.

The trick is to diversify the grid and look for efficiencies, according to Hall. And there’s a suite of things Yukon Energy is working on, in the near and long term, to do both.

Residents to make money generating wind, solar power

Hall said an easy win when it comes to efficiency would be to update the Whitehorse dam’s turbine, which dates back to the 1950s.

But beyond that, Yukon is working to expand a program that enables residents to make money by generating wind, solar and biomass electricity and feeding it into the grid. 

Hall said the Yukon government is in the process of doubling how much the cottage industry can produce by providing financial and technical support to First Nations and municipalities.

The territory will also introduce legislation to regulate geothermal development. 

Yukon can also sync its grid with Atlin, B.C., where the Taku River Tlingit First Nation hopes to expand its hydroelectricity operations. The nation could provide the territory with upward of eight megawatts of power, Hall said. He added the project could be ready in roughly three years.

Better research to anticipate the weather

Since 2012, researchers at Yukon College, the Université du Québec and the University of Alberta have worked together with Yukon Energy to better predict water levels. 

The hope is the research will help the utility better prepare for unanticipated weather patterns. 

Brian Horton, manager of climate change research at Yukon College’s research centre, said there are five automated weather stations equipped with sensors that measure the depth and volume of the water in the snowpack at the headwaters of Yukon rivers. 

The stations also use precipitation gauges to determine the levels of snow and rainfall. 

The collected data, made available to Yukon Energy by satellite, can help determine seasonal forecasts and provide multi-decade projections, Horton said.

 If Yukon Energy knows how much water is flowing, “they can make decisions on how they can operate the generating facilities within the envelope that they’re given,” he said. “This gives them more heads up, more planning capacity for knowing what’s available, what’s in the bank account, basically.”

But all this work comes with a caveat.

“You’re going to have, from time to time, these … drought years,” Hall said. 

Developing a system that is 100 per cent renewable, even under drought conditions, is “just not realistic” for the territory, he added. 

“There could be years in the future where we have similar situations where you have to run diesel just to keep the lights on.”

If anything is predictable, it’s that weather patterns will become less predictable with climate change. 

Hall agrees, calling efforts to predict the weather a “crapshoot.” Case in point? The snowpack levels from the 2020 winter season that left the Whitehorse reservoir at 110 per cent. 

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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.

This is part three of a three-part, reader-funded series on the Muskrat Falls dam inquiry.

The Muskrat Falls dam in Labrador and the Site C dam in B.C. are on opposite sides of the country yet share some startling similarities. Both projects are being built with public money and both are billions of dollars over-budget.

In Newfoundland and Labrador, a two-year inquiry is underway to find out why the province’s energy corporation, Nalcor, continued full-steam ahead with the Muskrat Falls dam on the lower Churchill River despite early warning signs that the project was uneconomical.

The Muskrat Falls price tag — originally set at $6.2 billion — has now jumped to $12.7 billion. Newfoundlanders are bracing themselves for at least 50 per cent hydro rate increases when full power from the dam comes on-line next year.

In B.C., the contentious Site C dam on B.C.’s Peace River is tentatively scheduled for completion in 2024.

The Site C dam’s $10.7 billion tab — up from $6.6 billion when the project was announced in 2010 — will come due only when the power comes on-line.

With so much at stake in B.C., The Narwhal is keeping tabs on the Muskrat Falls dam inquiry, which is hearing testimony from everyone from politicians and senior bureaucrats to SNC-Lavalin executives and Nalcor officials.

Here are nine things B.C. can learn from Newfoundland’s Muskrat Falls mistakes.

1) Don’t assume your Crown corporation will act in the public interest

The inquiry has revealed that Newfoundland politicians failed to rein in Nalcor, the publicly owned energy corporation that pushed the project forward despite internal knowledge of rising costs and increased project risks.

One government lawyer interviewed by inquiry co-counsels called Nalcor a “fiefdom” and a “runaway train.” In testimony at the inquiry, he said Nalcor “jealousy guarded access to its information.”

A number of Newfoundland politicians have testified that they trusted the information they received from top officials at Nalcor, leading inquiry co-counsel Barry Learmonth to call the politicians “naïve” and “blindly accepting” of Nalcor’s work.

“Government was simply accepting whatever Nalcor told you, with very little review. And I suggest to you that was a very risky decision to make.”

2) Don’t write a blank cheque from the provincial treasury

Newfoundland consumer advocate Dennis Browne told the inquiry last month that Nalcor received a “blank cheque” from the provincial treasury to build the boondoggle dam and its transmission lines.

Soaring costs for the Site C dam indicate that BC Hydro also has a blank cheque for the project.

Site C’s price tag had already risen to $7.9 billion by the time the project was examined by a federal-provincial panel.

Following that review, the price tag climbed by almost another billion dollars — to $8.8 billion — when former Premier Christy Clark granted final approval to the project in December 2014.

The independent B.C. Utilities Commission conducted a fast-tracked review in the fall of 2017 based on that price tag.

But only weeks after the commission delivered its final report, BC Hydro revealed that the dam’s cost had skyrocketed by almost another $2 billion, to $10.7 billion.

Despite having access to outdated budget information, the independent review concluded that the Site C dam’s final tab could exceed $12.5 billion.

“Who would build a house without asking the contractor, ‘What are the upper limits of the cost of this?’ ” Browne told media following his testimony. “No one out there who is reasonable would conduct themselves in such a fashion. But our government did.”

A tower crane is assembled on the south bank of the Peace River amid ongoing construction of the Site C dam in November 2018. Photo: BC Hydro

3) Restore independent oversight

Newfoundland’s Conservative government stripped the province’s public utilities board from deciding if the Muskrat Falls dam was in the public interest. The board was eventually asked to review the project, but it was given such limited terms of reference and outdated information from Nalcor that it said it was unable to reach any conclusions.

In B.C., much the same scenario unfolded. Determined to build the Site C dam, B.C.’s former Liberal government changed the law to remove the independent B.C. Utilities Commission (BCUC) from examining the project to determine if it was in the public interest.

The commission finally reviewed the Site C dam in the fall of 2017 but with limited terms of reference from a new NDP government and no power to recommend whether or not the project should go ahead. The commission was also given Site C dam budget information for its review that, just weeks later, was replaced by new numbers adding up to billions of dollars more for the final cost.

Normally the commission would have the power to scrutinize BC Hydro’s quarterly reports about Site C and to ask questions or for supporting documentation.

So far the NDP government has chosen not to reinstate the commission’s watchdog role in monitoring the Site C dam. BC Hydro files quarterly Site C reports to the commission, but it has no power to ask questions about the reports or to request supporting documentation.

Instead, the NDP government has set up a secretive Site C “project assurance board” whose members include six BC Hydro directors and a consultant who was commissioned by B.C.’s construction trade unions to write a report favourable to the project.

The findings of the “project assurance board” are not available to B.C. ratepayers who are paying for the Site C dam.

The Muskrat Falls inquiry led to an announcement from the Newfoundland government that it is restoring the “appropriate” role of the independent utilities board in providing project oversight.

The Muskrat Falls dam under construction in February 2019. Photo: Nalcor

4) Be prepared to toss your plan when your dam becomes uneconomical

Just as Nalcor planned for decades to construct the Muskrat Falls dam, BC Hydro planned for decades to construct the Site C dam.

Clark touted the Site C dam as a legacy project in keeping with a vision championed by populist premier W.A.C. Bennett, who constructed his namesake dam on the Peace River in the 1960s.

In Newfoundland, former Premier Danny Williams aimed to follow in the footsteps of legendary Premier Joey Smallwood, who constructed the behemoth Churchill Falls dam on its namesake river in the 1960s. (The dam became operational in 1971.)

But just because large hydro projects made economic sense in the 1960s and 1970s doesn’t mean they are viable now. The global energy market has shifted dramatically in the past decade and Canada’s publicly owned energy corporations haven’t kept up with the trends, according to energy experts.

Muskrat Falls energy will be sold to the U.S. for a pittance of what it costs to produce the power.

Site C’s hugely expensive power — destined for the U.S. spot market and B.C.’s already heavily subsidized LNG industry — will also never be sold for close to what it will cost to produce.

At $10.7 billion, the Site C dam is uneconomical, according to a 2019 report from the C.D. Howe Institute, which says it is in the best interests of BC ratepayers to cancel construction immediately. (In an email to The Narwhal, the B.C. energy ministry dismissed the report as “fundamentally flawed.”)

Power from uneconomical dams can’t be sold for what it costs to produce, leaving unsuspecting ratepayers to make up the difference.

The Muskrat Falls dam inquiry has highlighted opportunities when politicians could have stopped construction of the dam as costs rose and risks heightened.

5) Stop before taxpayers are on the hook for a big bailout

The cash-strapped government of Newfoundland and Labrador can’t afford to bail out Nalcor.

So it has to turn to the federal government for a Muskrat Falls bailout. That means federal taxpayers will help pay for the troubled project.

Like Nalcor, BC Hydro is deeply in debt. The B.C. government — which is in a far better financial position than the Newfoundland government — recently bailed out BC Hydro for $1.1 billion.

But the public utility is still $4.4 billion in the red even before the unsightly tab for the Site C dam comes due.

More taxpayer bailouts for BC Hydro are almost certain.

In December 2017, when explaining his decision to greenlight the Site C dam, Horgan warned that a BC Hydro bail out could lead to cuts to services and compromise the government’s ability to build schools and hospitals.

6) If you squander public money, beware

Newfoundland politicians, senior bureaucrats and Nalcor officials are all in the hot seat at the Muskrat Falls inquiry, which seeks to determine who was responsible for moving the boondoggle project forward.

The inquiry’s final report, due by the end of the year, is expected to point fingers. That could lead to charges against politicians and senior civil servants, as well as disciplinary hearings for members of professional organizations such as engineers and accountants.

James Meaney of Nalcor Energy prepares to take the stand at the Muskrat Falls Public Inquiry in St. John’s, N.L., on March 26, 2019. Photo: Paul Daly / The Narwhal

7) Secrecy doesn’t pay in the long-run

Like the Site C dam, the Muskrat Falls project was shrouded in secrecy until a public outcry forced an inquiry.

People like David Vardy, the retired chair of Newfoundland’s public utilities board, tried to get detailed information about the Muskrat Falls dam for years through access to information requests, often coming up empty-handed or with critical pages redacted. All the while, the Newfoundland government assured the public that everything was fine.

Now the previously secret reports are part of the inquiry testimony, available to the public. They paint a disturbing picture of a Crown corporation so determined to push forward with dam building that it withheld pertinent information from decision-makers, according to evidence presented at the inquiry.

The veil of secrecy surrounding the Site C dam was briefly lifted by the fast-tracked B.C. Utilities Commission review. But since then detailed information about the project’s cost, schedule and geotechnical problems have been kept secret.

8) Request a copy of any SNC-Lavalin risk assessment report

The embattled global engineering firm SNC-Lavalin was involved in cost estimates for both the Site C and Muskrat Falls dams.

In the fall of 2012, as questions about SNC-Lavalin’s global business practices made headlines, a new CEO came on board to steer the corporate ship away from the shoals.

Bob Card, an American engineering veteran who had served as the U.S. energy ministry undersecretary, replaced SNC-Lavalin CEO Pierre Duhaime, who had been arrested on fraud charges.

Card was tasked with putting a plan in place to show the World Bank, which had assigned a full-time monitor to SNC Lavalin, that “SNC was putting everything in place to avoid [being] caught in any future issue,” according to inquiry testimony from Normand Béchard, the Muskrat Falls project manager for SNC-Lavalin. That included reviewing and amending policies, and ensuring compliance, Béchard said.

Card brought best management practices with him, according to Béchard. And one of those best practices was to assess risks on large projects in which SNC was involved, in order “to better control the exposure of the company.” From then on, every big project would need to have a SNC-Lavalin corporate risk assessment, Béchard told the inquiry.

Béchard was tasked with the Muskrat Falls corporate risk assessment, a job he said took up to a month and a half to complete.

His risk assessment pegged the financial risk for the Muskrat Falls dam at $2.4 billion higher than Nalcor’s budget for the project.

Whether or not Nalcor ever saw the SNC-Lavalin report is a matter of dispute.

Jean-Daniel Tremblay, director of risk assessment services at SNC-Lavalin, recently testified at the inquiry that it was his understanding that Nalcor had seen the report but that the report needed “to not exist” because it could have been made public through an access to information request. (Former Nalcor CEO Ed Martin has said he never saw the report.)

Béchard’s testimony suggests that somewhere — as costs soar for the Site C dam — there may be a SNC-Lavalin internal risk assessment report that could provide valuable information about risks and related additional costs.

BC Hydro told The Narwhal it is not aware of any SNC-Lavalin internal risk assessment report for the Site C dam. SNC-Lavalin did not respond to a request for a brief interview.

9) Eventually a public outcry will ensue

The public outcry about the Muskrat Falls dam began when Newfoundland ratepayers realized their hydro rates were poised to soar to pay for the project.

B.C. ratepayers are already facing new hydro rate increases of at least eight per cent over the next five years even before they start paying for the Site C dam in 2024.

With almost no scrutiny from most of B.C.’s media, the Site C dam continues to fly beneath the public radar — for now.

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.

This is part two of a three-part, reader-funded series on the Muskrat Falls dam inquiry.

Marjorie Flowers grew up in the Labrador community of Rigolet on the shores of Lake Melville, eating nutrient-rich Inuit foods like brook trout and seal. Traditional foods still form the backbone of her extended family’s diet, as they do for thousands of Inuit who hunt seal each April and catch salmon in June.

Even if Flowers wanted to buy all her food from local grocery stores, “the price of food here in Goose Bay is just outrageous,” she said. “We’re paying $30 for a small chicken.” A medium-sized cabbage costs $4 or $5, while a package of cheddar cheese fetches $18.

“Half the people here can’t afford to buy from the stores,” Flowers told The Narwhal. “We’ve depended on that food for decades and centuries as a way of life.”

But this spring will be the last that Flowers and her daughter, who is five months pregnant, consume country food from the Lake Melville area without fear of health impacts from methylmercury, a neurotoxin so dangerous the World Health Organization ranks it among the top ten chemicals of public health concern.

In the next year, when the Muskrat Falls hydro dam on Labrador’s lower Churchill River floods an area twice the size of the city of Victoria, methylmercury will immediately start to contaminate the food chain as microbes feed on inorganic carbon stored in flooded soils and vegetation, setting off a sequence of events.

Methylmercury impacts of hydro dams

“It’s widely known that hydroelectric development has a methylmercury impact,” said Ryan Calder, a Duke University postdoctoral associate and expert on the methylmercury impacts of hydroelectric development. “That is beyond question at this point.”

When large hydro dams flood river valleys and forests, microbes convert inorganic mercury — found in soils worldwide in greatly increased levels due to coal-fired power plants and other industrial activities — into methylmercury, the type of mercury of greatest concern for human health.

Most human exposure to methylmercury comes from eating fish, although marine mammals like seals and other traditional foods can also carry high levels.

“This is what our body consists of — our cellular make-up is fish and seals and the wild birds that come into the rivers,” Flowers said.

Dane Shiwak, 8, removes his gloves to absorb the warmth from the breast of a ptarmigan that he shot with his father Martin while on the land in Rigolet in northern Labrador. Martin Shiwak, an experienced Inuit trapper and hunter, tries to impress upon his children the importance of understanding how to live off the land on Labrador’s rugged northern coast. Photo: Darren Calabrese

“It’s all the other seafood and wildlife, too, that we depend on in Lake Melville. It’s the smelts, it’s the trout, it’s the shellfish, it’s all the fur-bearing animals in the area that depend on the seafood. And the seals in the spring. Right now, it’s spring hunting for seals. It’s not an industrial seal hunt here, it’s for sustenance.”

Mercury impacts extend far beyond area considered in environmental assessment: Harvard study

Lake Melville, a brackish subarctic estuary downstream from the Muskrat Falls dam, was not included in an environmental assessment conducted by Nalcor, the province’s publicly owned energy corporation.

Nalcor said it did not study Lake Melville — designated an “ecologically and biologically significant area” by the Canadian Science Advisory Secretariat — because it predicted that the Muskrat Falls dam would have no measurable impacts on the estuary, a traditional Inuit hunting and fishing ground.  

But that decision didn’t sit well with Flowers and other Inuit.

In 2014, the Nunatsiavut government, which represents the Inuit Land Claims Area, commissioned a scientific study of the impacts of methylmercury from the Muskrat Falls dam. Calder, a civil engineer and PhD student at Harvard University’s School of Public Health at the time, was one of a half-dozen American and Canadian scientists who worked on the peer-reviewed research project, led by Harvard.

There was no reason for Nalcor to cut off the Muskrat Falls dam environmental assessment study area at the boundary of Lake Melville, Calder told The Narwhal.

“There’s no scientific basis to say that there’s no impacts. There’s all kinds of data from Quebec and Brazil that show that in many cases downstream impacts are greater than from reservoirs … the methylmercury comes from the bottom of the reservoir and what comes out of the dam is disproportionately the methylmercury-rich bottom waters.”

“A lot of data from Quebec over the past 40 years has shown very clearly that when you dam a river over the next few years the mercury levels in the fish increase.”

A Harvard-based study found methymercury impacts extend far beyond the region assessed in Nalcor’s environmental assessment. Source: Nunatsiavut Government / Harvard. Map: Dezine Studio / The Narwhal

From Minimata to Grassy Narrows: the rise of methylmercury contamination

Methylmercury surfaced as a global concern in the 1950s, when four people from the Japanese coastal city of Minamata were admitted to hospital with mysterious neurological diseases characterized by general muscle weakness and damage to hearing, speech and vision.

Eventually 900 people in Minamata died and several thousand more were afflicted with serious and, in many cases, permanent symptoms that also included kidney, lung and skin ailments.

The culprit turned out to be methylmercury in waste water discharge from a chemical plant. The mercury had quickly travelled up the food chain as Minamata residents consumed their traditional diet rich in local fish and shellfish.

Two decades later, methylmercury contamination made headlines in Canada when residents of the Grassy Narrows First Nation in northern Ontario were poisoned after eating fish from the English-Wabagoon river system, tainted by a mill that dumped industrial effluent containing methylmercury into the water.

Residents of Grassy Narrows still suffer from a host of chronic health problems, including language and speech disorders and vision troubles.

The Muskrat Falls study experimentally flooded soils from the future reservoir area, showing a spike in methylmercury concentrations within 72 hours, and a 14-fold increase in methylmercury concentrations within 120 hours, with elevated levels expected to last decades.

Inuit reliance on traditional foods

The study found that human exposure to methylmercury could increase by up to 1,500 per cent because of the Muskrat Falls dam. Locally caught wildlife represents a large fraction of food consumed by Inuit living around Lake Melville, constituting 70 per cent of their future exposure to mercury, according to the study, which noted that country foods are at the heart of Inuit health, well-being and culture.

Those country foods carry significant nutritional benefits, according to researchers. On days that country food is consumed Inuit diets have significantly less fat, carbohydrates and sugar and more protein and essential micronutrients such as vitamins, riboflavin and iron.

Because environmental systems are hugely complex, no one really knows what the impact will be until impoundment, Calder said, so scientists used environmental models to characterize the likely range of impacts on both the environment and human health.

They developed estimates for the impact the Muskrat Falls dam would have on methylmercury levels in the river and Lake Melville and connected those estimates with a dietary study to understand impacts on human exposures. Then they assessed those increases in the context of the health benefits of eating foods like fish.

“On the one hand methylmercury is bad. You don’t want to increase exposure to methylmercury. But, on the other hand, fish and seal and other nutritional foods are very nutritious,” Calder said.

“We didn’t find anything to suggest that people are going to drop dead or face acute medical distress as a result of the increases. Grassy Narrows is a whole other magnitude of risk.”

Among other predicted outcomes for Muskrat Falls, researchers found “some risk of delayed neurodevelopment of children born to mothers with elevated exposures.” IQs in the next generation would be reduced, “fractions of an IQ point, on average,” according to Calder.

Increased exposures to methylmercury could also lead to a higher risk of heart disease and other health impacts, Calder said.

Derrick Pottle, an experienced Inuk trapper and hunter whose diet is 95 per cent sourced locally, carries sealskin boots and a caribou jacket from the loft of his shed while preparing for a hunting trip in Rigolet. Pottle’s diet of wild game, salmon, berries, trout and seal would have been similar to his ancestors living in Hamilton Inlet roughly 8,000 years ago. Photo: Darren Calabrese

Canada’s guidelines for human consumption of methylmercury are weaker than those in the U.S.

Under the Canadian guidelines, the Harvard study found that more than 200 Inuit will potentially exceed health guidelines for methylmercury ingestion if the future reservoir area is partly cleared of trees and brush. Under U.S. guidelines, that number rises to more than 400 individuals under a high methylmercury scenario.

Calder’s modelling drilled down into questions like whether or not eating less trout would be a good decision or a bad decision given the health benefits of consuming it and the alternative foods available. One of those alternative foods is Atlantic salmon, which will have much lower mercury levels because they spend most of their life at sea.

Calder said there is room within the traditional diet to adapt and eat more species that are lower in mercury to counterbalance mercury increases in other food such as seal.  

“We shouldn’t tell people to be afraid of local food … If you’re worried about mercury and instead of eating trout you eat Doritos, that’s not a health protective response. You’re better off eating more mercury.”

‘A way of life that has existed for centuries’

But that’s of little solace to Flowers, who says she is “not comfortable” at the thought of her pregnant daughter and future grandchild eating traditional foods tainted with methylmercury. She views the Muskrat Falls dam as one more serious threat to the long-term survival of Inuit culture, with its deep connection to the land.

“It infuriates me,” said Flowers. “It really does make me so mad that there’s a group of people, most of them Aboriginal, that have concerns about a way of life that has existed for centuries. And we can’t even be heard. We’re frustrated beyond frustrated.”

In an attempt to draw attention to the impacts of the Muskrat Falls dam, Flowers and 60 others, including Indigenous elders, have blocked the gates to the project and engaged in other acts of civil disobedience. Flowers said she’s been arrested so many times that she’s lost track of the charges against her, which include extortion.

In 2017, Flowers refused to sign a document saying she would stay away from the Muskrat Falls gates where protests were taking place.

” … all I’m doing is standing up for the rights of my people and a way of life that originated here first.”

“That’s when they incarcerated me. The took me to a jail cell down here in Goose Bay and then half an hour later I was on a flight to St. John’s and put in [Her Majesty’s] men’s penitentiary for 10 days.”

After Flowers was flown back to Labrador, she was placed under house arrest for 29 more days.  

“I’m the one being punished and being made to look like an irrational bad person when all I’m doing is standing up for the rights of my people and a way of life that originated here first,” she said.

“We were the first people here. And now we’re being trampled on and silenced by this colonial system that we can’t win against.”

Escalating protests led the Newfoundland government to strike an independent expert advisory committee to review science and traditional knowledge and examine ways to reduce methylmercury contamination from the Muskrat Falls dam.

While Nalcor accepted the committee’s recommendations about aquatic program monitoring and methylmercury modelling and acted on them, at least in part, it has ignored other important recommendations, according to Rodd Laing, director of environment for the Nunatsiavut government.

Those include a recommendation that Nalcor undertake targeted removal of soil — the most immediate contributor to a spike in methylmercury — and capping of wetlands prior to flooding in order to minimize contamination of local food sources.

Nalcor has also ignored three out of four recommendations made by the Nunatsiavut government as part of its Make Muskrat Right campaign, including to clear all trees, vegetation and soil from the future reservoir area.

Removing soil and clearing all the trees and brush would add to the cost of the hugely over-budget $12.7 billion project, now the focus of a two-year provincial inquiry.

Chief financial officer Derrick Sturge of Nalcor Energy leaves the Muskrat Falls inquiry in St. John’s, N.L., on March 27, 2019. Photo: Paul Daly / The Narwhal

“There’s also a huge cost to Indigenous peoples if the level of mitigation is not appropriate for this project,” Laing said in an interview.

“Based on the science and the modelling that’s been done, this it the one chance you have to mitigate the impounding of the reservoir. As soon as you put water on that you’ve lost the opportunity to mitigate any of these methylmercury impacts.”

Nalcor has already started to bring up the reservoir level, aiming for the full 39-metre height later this year — about the size of a 13-storey building — and for full power next year.

“The methylmercury is accumulating as we speak,” Flowers said.

In a statement emailed to The Narwhal, Nalcor said it has put many resources into understanding changes in methylmercury levels “and we remain committed to continuing this in the future to ensure the health and safety of those living in the Muskrat Falls project area.”   

Nalcor said its methylmercury monitoring plan will track changes in methylmercury concentrations in water and sediment at 11 locations along the lower Churchill River, from Grizzle Rapids to Rigolet, following increases in the water levels with the creation of the Muskrat Falls reservoir.

To date, concentrations of methylmercury measured have “generally remained low,” Nalcor said, noting “a couple of slight increases in methylmercury” that do not pertain to the downstream area around Goose Bay and Lake Melville.

“Based on all of the information and data collected to date, the increase in methylmercury in fish predicted would result in an extremely low chance of risk to human health from eating fish from Goose Bay or Lake Melville at peak levels following raising the water levels to full height,” Nalcor stated.

“Based on these predictions, local residents would continue their land and resource use, including consuming a healthy, traditional diet.”

That statement is echoed by BC Hydro, which says people will be able to continue consuming bull trout and other fish species once the Site C dam floods 128 kilometres of the Peace River and its tributaries, putting them under up to 15 stories of water.

“. . . fish mercury levels in the reservoir will increase for a time, but the increase is predicted to be sufficiently low that it will not create risks to fish, wildlife or human health,” says a 2018 BC Hydro fact sheet on Site C and methylmercury, which points out that fish will be tested for methylmercury contamination after flooding.

BC Hydro bases its findings on a 2012 study of methylmercury it commissioned. There has been no independent review of Site C’s methylmercury impacts on human health and the environment.

The Muskrat Falls dam under construction in April 2018. Photo: Nalcor Energy

‘Time wasted’

Memorial University scientist Trevor Bell called the lack of action to reduce the impacts of Muskrat Falls mercury contamination “time wasted.”

“Nothing has really happened since the fall of 2017,” said Bell, a member of the science advisory committee that formed part of the independent expert advisory committee.

“One of the things the engineers have said is that, in order to [carry out] some of the recommendations of the advisory committee, time is a critical issue. The government has let time drain away to some degree.”

Bell said the “wait and see” approach to see if methylmercury levels are elevated above safe guidelines isn’t good enough, given that available science suggests there will be a health impact on Inuit living downstream of Muskrat Falls.

“Here we should be doing everything we can to limit increased methylmercury in the system,” Bell said in an interview. That includes reducing the amount of soil with organic carbon in the system and covering up wetlands where organic carbon may be exposed to flooded water, he said.

The Inuit community of Rigolet. Photo:Darren Calabrese

Failing to take every measure possible to limit mercury contamination of traditional Indigenous food sources in Nunatsiavut results in a “morally unacceptable harm” imposed without adequate consideration of Inuit human rights, Bell said.

“It affects Indigenous rights to basically impose food advisories on them because of elevated methylmercury.”

These rights are protected by the Labrador Inuit Lands Claims Agreement, the Canadian Constitution and the UN Declaration on the Rights of Indigenous Peoples.

In February, Flowers testified at the Muskrat Falls dam inquiry, telling commissioner Richard LeBlanc that she had listened to plenty of testimony about the project being over-budget and behind schedule and that she didn’t really care about those things.

“Because more fundamentally — to me, as a human being, as an Indigenous woman, as a person who occupies this land, whose ancestors occupied this land for centuries — we’re the ones who will face annihilation as far as I’m concerned,” Flowers told the inquiry, which seeks to determine why the Muskrat Falls dam proceeded.

“And this is one step in that direction. If you’re taking away my food source, what else are you going to take next?  

Flowers said in an interview that there are “really no words” to describe how she feels about the impending contamination of Inuit country foods with methylmercury.

“I feel very passionate about continuing to spread the message. I feel so angry that we’re ignored.”

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.

This is part one of a three-part, reader-funded series on the Muskrat Falls dam inquiry.

When Madonna Summers leaves a “Kettle is On” lunch for seniors at the MacMorran community centre in St. John’s, N.L., she pulls down her white hat and wraps a crocheted azure scarf around her neck.

It’s not just the outside chill, at the close of a harsh and windy winter, for which Summers prepares as she fastens her black winter coat and steps out of the cheery clapboard building on Brother McSheffrey Lane.

Her long-time family home is only a short stroll away on Ridge Road and it’s not very warm. Summers has turned off the baseboard heat in all but three rooms, wedged blankets across the bottom of doors and rolled tape along wooden window frames to keep out the draft. But her last monthly hydro bill was still $244.

“I can’t have the heat up the way I want it,” Summers, 70, tells The Narwhal. “I even wear a sweater to bed over my nightdress and I’ve got a lot of blankets on my bed.” If the hydro bill climbs any higher she says, “I’d have to cut back on groceries.”

Her friend, Teresa Boland, lives in nearby subsidized housing and pays a percentage of her heating bills. Yet Boland is still so worried about covering her share of hydro costs that she and her husband only keep the heat on in their kitchen, living room and hallway. Boland has to wrap a blanket around her legs when using the computer and her basement is “like a freezer,” she says.

“I’m so used to being cold now,” Boland says in an interview at the community centre, where she has just finished volunteering at the free Friday lunch and is wrapped in a chocolate brown fleece coat as she prepares to leave the dining hall. “My husband is always cold — he’s not well.”   

It’s a scenario becoming all too familiar to Kelly Heisz, executive director of the Seniors Resource Centre of Newfoundland and Labrador, which receives frequent calls from elderly people worried about balancing rising hydro bills with other household expenses.

“Some of them choose to turn the heat off during the day and go somewhere warm, whether it be a mall or community centre or someplace where they don’t have to spend the day in a cold house,” Heisz says.

“This winter was particularly cold and windy. Really cold. In homes that are not insulated so well the wind will whip right through your house.”

‘It was a gamble and it’s gone against us’

Boland and Summers have heard about the Muskrat Falls hydro dam but they don’t know much about the provincial inquiry taking place five kilometres away, on the third floor of a five-storey office building named after the Beothuk, Newfoundland’s Indigenous people who were driven to extinction in the 1800s.

The inquiry seeks to determine why the provincial government approved construction of the ill-conceived dam on Labrador’s lower Churchill River, which is nearing completion almost three years behind schedule and more than $6 billion over budget.

To pay for the $12.7 billion Muskrat Falls dam and its copious transmission lines, Newfoundland hydro rates are poised to jump by 50 per cent — in the best-case scenario, according to David Vardy, a Newfoundland economist and former head of the province’s public utilities board.

That rate hike would leave Summers holding a $366 bill for one month of winter hydro, a disquieting amount for the diabetic senior. Summers, who doesn’t stay home much during the day, says she has already turned down her thermostat “as low as it can go.”

With so much at stake, the “Commission of Inquiry Respecting the Muskrat Falls Project” is digging into why construction of the dam was approved in 2012 and why the provincial government didn’t shelve the project amidst early warning signs of its unaffordable price tag.

Led by Justice Richard LeBlanc, the two-year inquiry has a budget of $33.7 million and four detailed terms of reference from Newfoundland’s Liberal government, which inherited the partially constructed Muskrat Falls dam when it came to power in late 2015.

Among other questions, the inquiry will determine if Newfoundland’s government “employed appropriate measures to oversee” the Muskrat Falls project built by Nalcor Energy, the province’s publicly owned energy corporation.

It’s also looking into whether the government “was fully informed and was made aware of any risks or problems associated with the project, so that it had sufficient and accurate information” on which to base decisions.

Judge Richard LeBlanc, commissioner for the Muskrat Falls public inquiry in St. John’s, N.L., talks with a sheriff before he enters the room on March 27, 2019. Photo: Paul Daly / The Narwhal

Ultimately, the inquiry will determine which politicians, Nalcor officials, senior bureaucrats and contractors — companies that include the embattled SNC-Lavalin — were aware of heightened project risks and costs, when they knew about them, and why that information was withheld from the public, the de facto owners of the dam.

“We’ve spent so much money and compromised so many future generations.”

Even Nalcor’s current CEO Stan Marshall calls Muskrat Falls a “boondoggle” and says the dam should never have been built. “It was a gamble and it’s gone against us,” Marshall told reporters in 2016. “Muskrat Falls was not the right choice for the power needs of this province.”

LeBlanc can’t recommend criminal charges or judge professional misconduct. But his final report, due before the end of the year, is expected to point fingers at those responsible for building a project that current premier Dwight Ball describes as “the biggest economic mistake in Newfoundland and Labrador’s history.”

That could lead to charges against politicians and senior civil servants and disciplinary hearings for members of professional organizations, such as accountants and engineers.

“The best outcome would be to put a whole bunch of people in jail,” says Vardy, solemn and bespeckled. “We’ve spent so much money and compromised so many future generations.”

‘Naysayers and cranks’

On an overcast day at the tail end of March, Vardy arrives at the inquiry wearing a Greek fisherman’s hat and a knotted scarf. He nods hello to two sheriffs wearing regulation bullet proof vests and steps through a metal detector to the hearing room, where he has been a constant presence since the inquiry began hearing testimony last September.

Vardy is one of the “Three Muskrateers,” as family members call them — a trio of reputable St. John’s residents who sounded the alarm years ago about Muskrat Falls and were largely ignored.

“This was renewable energy, this was motherhood and apple pie,” says Vardy, who also served as the province’s deputy fisheries minister and its top civil servant.

“It’s only when you get into the details that it looks awful.”

The trio predicted the Muskrat Falls dam would cost $13 billion, not $6.2 billion. That’s in keeping with an Oxford university study that found the vast majority of large hydro dams are significantly over budget and uneconomical.

They also raised red flags about the project’s lack of transparency, especially given that it was almost impossible to get any detailed information about risks and rising costs. (The same holds true for the Site C dam currently under construction on B.C.’s Peace River, a project described by international hydro expert Harvey Elwin as unprecedented to him in its secrecy.)

“Nobody wanted to hear the other side of the story,” recalls Ron Penney, a lawyer and Newfoundland’s former deputy justice minister, former deputy health minister and former deputy minister of public works and services. “We were thought of as a bunch of naysayers and cranks.”

Along with Des Sullivan, a St. John’s businessman who was a former senior advisor to two Newfoundland premiers, Vardy and Penney formed the Muskrat Falls Concerned Citizens Coalition. The coalition — which goes by the slogan “seeking truth and demanding accountability” — was granted full standing at the inquiry.

Left to right: Vocal critics of the Muskrat Falls project from the beginning, economist and former Newfoundland Public Utilities Board chair David Vardy, former city manager and provincial deputy minister of public works Ronald Penney and Des Sullivan, producer of the Uncle Gnarley blog. Photo: Paul Daly / The Narwhal

Sullivan, who initially supported the Muskrat Falls dam, says he became suspicious when the Newfoundland government refused to allow a watchdog public utilities board to review the project to determine if it was in the best interests of ratepayers.

That decision, which mirrors a B.C. government decision to exclude the B.C. Utilities Commission from deciding if the Site C dam was in the public interest, is now under the microscope at the inquiry, with former politicians and premiers on the stand.

The Muskrat Falls project’s lack of transparency and a backlash against Vardy and Penney, who publicly called for an independent review, were other warning signs for the seasoned political advisor.

“The more I learned the more upset I became,” says Sullivan, who is now in real estate and writes a blog about provincial politics called Uncle Gnarley that has been a nexus for Muskrat Falls criticism (“opinions on Newfoundland politics that bite.”). “For people like Dave and Ron and others to be pilloried, for raising objections … just didn’t resonate.”

Muskrat Falls, according to Sullivan, is ultimately “about a group of people given access to a large public purse who wanted to do a large project.”

“They wanted another notch in their belt. And essentially they were prepared to do it even while deceiving the people of the province, in order to get licence to do it.”

The signs ignored

A forensic audit, undertaken as part of the inquiry, has revealed that Nalcor executives knew early on that Muskrat Falls capital cost estimates were wrong but chose to forge ahead with the project.

The audit found that Nalcor should have known shortly after the provincial government gave the green light to build Muskrat Falls — when there was still time to cancel the dam — that work was already half a year behind schedule and the project’s contingency fund had already been drained, sure signs of impending cost overruns.

The Muskrat Falls dam under construction in February 2019. Photo: Nalcor

Muskrat Falls transmission facility. Photo: Nalcor

Evidence has been presented that Nalcor intentionally kept information about the exhausted contingency fund from government officials.  

Nalcor also knew for months that costs were soaring but did not include that information in monthly construction reports to government, according to evidence presented at the inquiry.

“The conversation that Newfoundland is inevitably going to come to grips with is ‘how did the politicians of the day allow this Crown corporation to deceive the public, and why were they — the politicians — so willingly deceived?’ ” Sullivan reflects.

The art of the questionable deal

For Roberta Frampton Benefiel, the Muskrat Falls dam can be explained, at least in part, by a story about rotten onions.

The onions were in a bin in her local grocery store in the central Labrador town of Happy Valley-Goose Bay, 36 kilometres from Muskrat Falls.

Benefiel, who had just moved back to her hometown after three decades away, couldn’t spot a single mesh bag that didn’t have a pulpy mess inside. She found the store manager and demanded unspoiled onions, even if all the bags had to be torn open and their contents reassembled.

The friend shopping with her slunk away, embarrassed, but Benefiel eventually exited the store with onions she didn’t have to toss. “You walked away from this?” she said to her friend. “You should have been screaming long before I did.”

“We were way out of sight and out of mind. We didn’t exist …”

“Now, to be fair,” Benefiel tells The Narwhal, “had I lived there for the 30 years that I was gone I might have been in the same boat — thinking that I didn’t have a voice, thinking, ‘oh, that’s good enough.’ ”

In Benefiel’s view, Labradorians are far too accustomed to accepting questionable deals, especially from some of the corporations that dip into the honey pot of Labrador’s natural resources.

And no issue personifies that more for the 73-year-old great-grandmother than the Muskrat Falls dam, which takes its name from a natural waterfall, in turn named after the furry, semi-aquatic animal that populates wetlands the dam will flood.

“We didn’t have a voice,” Benefiel says. “We were way out of sight and out of mind. We didn’t exist, except to take Voisey Bay minerals and Lab City iron ore and, now, hydro power from our river … We’ve been used for years.”

Roberta Frampton Benefiel of the Labrador Land Protectors at the Muskrat Falls public inquiry in St. John’s, N.L., on March 27, 2019. Photo: Paul Daly / The Narwhal

Benefiel’s necklace bearing the logo of the Labrador Land Protectors. Photo: Paul Daly / The Narwhal

Benefiel holds her Labrador Land Protector necklace. “I’m a Labradorian. It’s my home and I don’t want to see it destroyed,” she told The Narwhal at the Muskrat Falls hearing. Photo: Paul Daly / The Narwhal

Nalcor is building the Muskrat Falls dam in Labrador when there’s a moratorium on building new dams in Newfoundland, Benefiel points out. She’s also keeping tabs on countries like Brazil, who are rethinking construction of new large dams due to their deep social and environmental footprints, which include emissions of methane and other potent greenhouse gases from reservoirs.

The Muskrat Falls dam is no exception to those well-documented impacts. The dam will flood the traditional homeland of the Innu, Inuit and southern Inuit, destroying more than 100 square kilometres of a sub-Arctic valley that has long provided Indigenous peoples with food and travel routes and is considered to be the most important cultural and environmental feature in all of Labrador.

Among other impacts, the dam will contaminate traditional Aboriginal foods — such as seals and land-locked salmon, known as ouananiche —with methylmercury and eliminate bird-breeding wetlands and habitat for at-risk species such as caribou, including for the highly endangered Red Wine Mountain caribou herd.

The great downturn

Central Labrador is no stranger to large dams. When the behemoth Churchill Falls dam, 300 kilometres upstream from Muskrat Falls, became operational in 1974, it flooded an area larger than Switzerland that had been the traditional hunting and trapping territory of the Labrador Innu.

But this time around, some of the weightiest consequences of dam construction will also be felt in Newfoundland, whose jagged northwest tip juts out into the Atlantic Ocean 17 kilometres from the southern shores of Labrador, across the foggy and gale-struck Strait of Belle Isle.

And those consequences will come at a time when Newfoundland can least afford them, as the province struggles to recover from the long-lingering effects of the 1992 cod fishery collapse and a faltering oil boom.

Signs of economic downturn are everywhere in St. John’s. The steep hills of the picturesque capital are dotted with ‘For Sale’ signs, including on a church hall, a union hall and the Bacalao restaurant, which offered “nouvelle Newfoundland cuisine” before it was shuttered.

At the Gathering Place, a non-profit service centre near the downtown, 350 people line up for a free home-cooked lunch every week day, according to executive director Joanne Thompson.

The facility, which also offers dental and medical care, showers, laundry facilities and a bright and warm place to spend the day, will soon open for dinner and on weekends to meet the growing demand, Thompson says.

The impact the Muskrat Falls dam will have on Newfoundland brings no cold comfort to Benefiel, who has seen her town’s streets churned up by heavy truck traffic, its small hospital become among the busiest in Canada per capita and bags of hazardous fly ash dumped in the unlined landfill during the past six years of dam construction — all before a 59-kilometre stretch of the valley is flooded.

“I’m a Labradorian. It’s my home and I don’t want to see it destroyed,” she says.

Benefiel arrives at the inquiry wearing a $7 trench coat she has just purchased at a Salvation Army thrift store and driving a borrowed white Mercedes. The only strip mall and clothing store in Happy Valley-Goose Bay has just burned down and her thick Labrador winter coat is too warm for St. John’s near-zero temperatures, she explains.

The Mercedes is on loan from a friend who has asked Benefiel, plasterer and painter by trade, to do a small favour and climb up a ladder to tar a stubborn leak in her roof. Benefiel, who had a knee replacement only a few months earlier, thinks she is ready for this. It’s less strenuous for her knee than running the Goose Bay Kritter Sitter boarding kennel out of the home she built herself with weekend help from friends.

“I’m here to keep track of what’s said and to catch any discrepancy — and we’ve caught a lot,” she says.

“We have been saying things all this time and these things are now coming out at the hearing … We said the costs at sanction [final approval] had been tampered with and that’s been borne out.”

Benefiel represents two Labrador-based groups that share partial standing at the inquiry, which shifts to an arts centre in Happy Valley-Goose Bay for two weeks at a time: the Grand Riverkeeper Labrador Inc., a non-profit organization dedicated to protecting the Churchill River and its estuaries, and the Labrador Land Protectors.

‘Danny’s project’

The land protectors are a group of Indigenous and non-Indigenous people who have been trying to stop Muskrat Falls — including, in some cases, through hunger strikes and civil disobedience — since they became aware that methylmercury would poison their food sources and learned about Nalcor’s decision to fortify a natural spit of land for the dam’s north spur.

The problem with the north spur, Benefiel explains, is that it’s built on “quick clay” prone to landslides. Failure could wipe out the downstream community of Mud Lake, accessible only by snowmobile or boat, and flood lower-lying areas of Happy Valley-Goose Bay, including her own home.

Nalcor maintains the north spur is perfectly safe. But the two Labrador groups — as well as a group of Newfoundland lawyers and the Concerned Citizens Coalition — are calling for an independent panel to assess its stability, much the way that local residents are calling for an independent safety assessment of the Site C dam in B.C.’s Peace River valley, also prone to landslides.

Benefiel was born in the Newfoundland fishing village of Little Catalina but grew up in Labrador after her family relocated when she was a baby. She raised her children in Tennessee and then went to university while in her 50s, earning a degree in environmental studies with a minor in geography while she painted houses for a living.

After falling off a ladder in Sackville, N.B., and breaking her leg, she hobbled back to Labrador and dropped in on her friend Clarice.

“I walked into her house and into the middle of a meeting and she said ‘you’re now a member of the Friends of Grand River.’ That’s how it all got started,” Benefiel remembers.

The meeting was about the Muskrat Falls dam and a far larger sister dam, the Gull Island dam, that Nalcor wanted to build further upstream.

Back then, it was common knowledge that Nalcor and the province’s premier Danny Williams were planning to build the two hydro projects. The plan was rumoured to have been hatched in St. John’s Guv’nor Inn, whose menu today features island fare like moose yorkies — Yorkshire puddings stuffed with moose meat — and cod tongues and scrunchions — tasty morsels of fried salted pork rind and fat. But nothing had been officially announced.

Williams seemed determined to build Muskrat Falls, much the way his legendary predecessor Joey Smallwood had championed construction of the Churchill Falls dam 40 years earlier and populist B.C. premier W.A.C. Bennett had built his namesake dam on the Peace River in the 1960s.

“It was Danny’s project … a legacy project,” says Penny, who also served as St. John’s city manager and the city solicitor.

Muskrat Falls was praised by politicians as “a good, sound financial project for Newfoundlanders.” The dam, to be constructed before the Gull Island dam, would “not increase net debt by a cent,” they promised.

Former Newfoundland premier Kathy Dunderdale, who granted final approval to the project in 2012 after Williams stepped down, called Muskrat Falls the “most cost-effective green energy solution for the demands of the people of Newfoundland and Labrador.”

In April, Dunderdale testified at the inquiry that she must have known about a $300 million jump in the project’s price tag — an issue only disclosed to the public through the inquiry — when financing arrangements were finalized in November 2013.

But some former cabinet ministers, including the ministers of finance and natural resources at the time, have testified they were not aware of the increase, and the inquiry has so far found no paper trail to back-up Dunderdale’s testimony that cabinet was fully informed.

Senior Newfoundland government officials were briefed about the jump in cost, but they may not have conveyed this information to politicians tasked with making the final decision, according to other evidence presented at the inquiry.

The ‘dupes’ of Nalcor?

The hearing room’s curtains hide a view of St. John’s striking harbour, its steep sides ringed with the winter’s last snow, and the copper-roofed provincial legislature known as the Confederation Building.

It’s in this building, inquiry co-counsel Barry Learmonth repeatedly suggests, that politicians should have engaged in far more rigorous oversight of the Muskrat Falls project. The government’s oversight of Nalcor was “weak, feeble and limited” and politicians were “dupes of Nalcor,” Learmonth has suggested.

In late March, a senior Nalcor official, James Meaney, is called back to the witness stand after testifying that even though he knew about significant cost escalations it was not up to him to disclose that information to the province.

That responsibility lay with Ed Martin, Nalcor’s CEO at the time, according to Meaney, who was Nalcor’s top financial official in charge of Muskrat Falls.

Dan Simmons, lawyer for Nalcor Energy, enters through security at the Muskrat Falls public inquiry in St. John’s, N.L. on March 26, 2019. He is followed by James Meaney of Nalcor Energy, who is prepared to go on the stand. Photo: Paul Daly / The Narwhal

As Meaney, with curly dark hair and a furrowed brow, takes his place in the black leather witness chair, his voice is steady and measured, almost a monotone. But his posture, with his left shoulder tilted higher than the right, and his restless hands, reaching for his water glass or twirling a pen, belies an inner agitation.

LeBlanc, framed by a large inquiry sign and the Newfoundland flag, scribbles note and weighs in occasionally as lawyers question Meaney.

Will Hiscock, counsel for the Concerned Citizens Coalition, asks Meaney about a Muskrat Falls cost increase from $6.9 billion to $7.5 billion that Nalcor sat on for many months.

“Were you ever refused permission to send something on to the independent engineer?” Hiscock asks, referring to MWH Global, the Colorado-based engineering firm hired to provide expert Muskrat Falls oversight for Ottawa and banks that lent billions of dollars to Nalcor for the project.

“I don’t recall a refusal,” Meaney says.

“There was a failure to provide information,” Hiscock clarifies a minute later. “You’re saying you weren’t refused but obviously permission wasn’t granted either to send stuff along. Was it just radio silence when you would reach out and say ‘we need to send something on to the government?’ ”

Meaney explains the information-sharing process, repeating that the Nalcor CEO Ed Martin needed to sign off, which prompts Hiscock to re-frame his line of inquiry.  

James Meaney of Nalcor Energy prepares to take the stand at the Muskrat Falls public inquiry in St. John’s, N.L., on March 26, 2019. Photo: Paul Daly / The Narwhal

“During the seven or eight months, when you knew you were sitting on old information — you had newer information there — did you ever say ‘can I send this to the government, can I send this to Canada, I’m going to flick this over to the oversight committee,’ whatever?’ “

Meaney says “there would have been lots of discussions in terms of trying to advance that information,” but he doesn’t answer yes or no.

Then Hiscock asks Meaney several times if the potential for Muskrat Falls cost increases was disclosed to Deloitte, the Crown corporation’s corporate auditors.

Meaney pauses. He purses his lips, frowns, jiggles his chair and tilts his head to one side.

“I expect they would have been aware that those are estimates and there is the potential for variation from those amounts, so there would have been discussion with Deloitte on that matter.”

“So that is a ‘yes, we did disclose the potential for cost overruns and the cost increases with Deloitte, our corporate auditors?’ ”

There would have been discussion with Deloitte “that those numbers could vary,” Meaney replies.

“And you wouldn’t have provided your corporate auditors with the out of date estimates? You would have been providing them with fresh, the best information you had — the $7.5 [billion] as soon as the $7.5 was available, the $6.9 [billion] as soon as the $6.9 was available, as they were your corporate auditors?”

Meaney says Deloitte would have been provided with updated costs estimates, but he doesn’t elaborate.

“I don’t believe it was in Deloitte’s mandate to look at the reasonableness of final forecast costs,” he says.

The details of SNC-Lavalin’s demotion

Vardy listens carefully to the testimony, conferring with Hiscock during the morning break and passing on questions that coalition members have been asking for years without response.

More than 100 thick white binders at the inquiry are labelled with names of witnesses called to the stand. They include former premiers, top civil servants, Nalcor officials and executives and senior employees from Muskrat Falls contractors like SNC-Lavalin.

Inside the binders are thousands of pages of previously secret and now unredacted Muskrat Falls dam reports, emails, memos and “confidential and commercially sensitive” Nalcor documents.

Vardy, Benefiel and others tried to obtain some of the reports and information through access to information requests, often coming up empty-handed or with critical pages redacted.

Together with testimony, the contents of the binders shine a spotlight on facts that project critics have been trying to put on centre stage for years.

Those in the media room observe Derrick Sturge of Nalcor Energy as he testifies at the Muskrat Falls Inquiry in St. John’s, N.L., in March 2019. Photo: Paul Daly / The Narwhal

Normand Béchard, project manager for SNC-Lavalin, prepares to testify at the Muskrat Falls public inquiry in St. John’s, N.L., in March. Photo: Paul Daly / The Narwhal

No one is exempt from being called to the witness stand, as former premiers, top civil servants and Nalcor officials are grilled by the inquiry’s co-counsels and a bevy of suited lawyers who sit at long desks day after day as monitors flash up exhibits.

Tommy Williams represents his brother, former premier Danny Williams, who announced the Muskrat Falls project to much fanfare in 2010 and, in his inquiry testimony last December, called continuing opposition to the project “reckless, irresponsible and shameful.”  

Even the embattled engineering firm SNC-Lavalin is on the stand, its Muskrat Falls documents relinquished to the inquiry for anyone to see. The Quebec company was a Muskrat Falls dam cost estimator, a role it also held for B.C.’s Site C dam.

SNC-Lavalin was also originally responsible for the Muskrat Falls dam engineering, procurement and construction management. Then Nalcor demoted the company amidst conflict revealed in jaw-dropping testimony, with Nalcor testifying it was unhappy with SNC’s early performance and a SNC-Lavalin veteran project manager saying his team was bullied by Nalcor and “treated like slaves.”  

Helpful inquiry staff call people ‘dear’ in Newfoundland brogue, similar to an Irish accent. The uniformed sheriffs pass around a box of chocolates at the end of the day. But underneath the island’s traditional friendliness the atmosphere is solemn and contemplative, the hearing room expectant, as LeBlanc and inquiry co-counsels try to get to the bottom of how so much public money was squandered.

‘You can’t un-crash a helicopter’

For those who question the amount of money spent on the inquiry, Vardy points to the crash of Cougar helicopter flight 491 as it ferried workers to a three-week shift on Newfoundland’s Sea Rose offshore oil platform. The 2009 accident killed almost everyone on board and led to an inquiry that made recommendations about how to improve safety in Newfoundland’s offshore industries.

“You can’t un-crash a helicopter,” Vardy says. “But you can find out why it happened and try to make sure it doesn’t happen again.”

Former Newfoundland utilities board director, David Vardy. Photo: Bojan Furst

The Newfoundland government, acutely aware of escalating worries about rising hydro rates, released a plan on April 15 called “Protecting You from the Cost Impacts of Muskrat Falls.” The plan is designed “to protect residents from increases to electricity rates and taxes resulting from the Muskrat Falls project that would affect the cost of living.”

The government describes the plan as the “culmination” of a series of important steps taken to protect residents.

Those steps include restoring the oversight role of Newfoundland’s public utilities board and securing a federal commitment to engage with the province “to expeditiously examine the financial structure of the Muskrat Falls project so that the province can achieve rate mitigation.”

A federal bailout with tough love conditions appears almost inevitable now for the cash-strapped province. “This is an existential threat to the financial independence of the province and to our political sovereignty,” Vardy says. “If we have to be bailed out by the feds we’ll lose some element of our sovereignty.”

At the end of April, just after the plan is released, Benefiel travels from Happy Valley-Goose Bay to the northeastern United States for a Muskrat Falls speaking tour, organized by the North American Megadams Resistance. Large dams are a “false solution” to the climate crisis, the alliance asserts, noting the disproportionate toll they take on Indigenous communities.

Benefiel says it’s important to educate “folks down south” about the perils of big hydro projects: “They’ve got to stop buying this damn power.”

“I don’t know what keeps me going sometimes,” Benefiel admits. “I’ve been fighting this project for 20 years.”

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West Moberly First Nations are not backing down from their long battle to stop the Site C dam following Tuesday’s announcement that they will engage in confidential discussions with BC Hydro and the provincial government, says Chief Roland Willson.

“Our position is that the dam should not go ahead,” Willson told The Narwhal. “We think there’s still an opportunity to kill the thing before they flood the [Peace River] valley.”

The B.C. government said in a press release that the discussions will “seek alternatives to litigation related to the Site C dam project.”

“We’re listening to what they have to say,” Willson said. “There may be an alternative [to Site C]. In the discussion we’re going to be talking about how they don’t have to destroy the valley. Our primary focus is going to be about trying to protect the valley.”

The West Moberly and Prophet River First Nations filed civil claims in January 2018 alleging the Site C dam and two previous dams on the Peace River unjustifiably infringe on their treaty rights.

The nations subsequently lost their application for an injunction to protect 13 areas of cultural importance for the Dunne-Za nations — including prime moose habitat, a rare old-growth white spruce and trembling aspen forest and two wetlands called Sucker Lake and Trappers Lake — from clear-cut logging for Site C.

But the judge ruled their treaty rights case must be heard by 2023, prior to Site C reservoir filling scheduled for 2024.

“Our position is that the dam should not go ahead. We think there’s still an opportunity to kill the thing before they flood the [Peace River] valley.” — Chief Roland Willson

West Moberly First Nations Chief Roland Willson.

Willson said the provincial government is under “enormous pressure from all over the place” to cancel Site C, which would flood 128 kilometres of the Peace River and its tributaries in the heart of Treaty 8 traditional territory, poisoning bull trout and other fish with methylmercury.

He pointed to a United Nations request that Canada suspend Site C dam construction until the project obtains the “free, prior and informed consent” of Indigenous peoples. Canada has until April 8 to report back to the UN Committee on the Elimination of Racial Discrimination outlining the steps it has taken to halt construction of the $10.7 billion dam.

Willson also highlighted a January study from the C.D. Howe Institute that concludes BC Hydro customers will be better off if the Site C dam is cancelled immediately, as well as the provincial government’s report on the first phase of a comprehensive review of BC Hydro, released in mid-February, which found B.C. has too much energy.

“There’s an abundance of power and we don’t need Site C,” said Willson, who has called the Site C dam “cultural genocide.”

“It was a political decision when [former premier Gordon] Campbell made it [in 2010]. It was a political decision when [former premier] Christy Clark approved it and it was a political decision when [premier] John Horgan decided to continue it.”

United Nations instructs Canada to suspend Site C dam construction over Indigenous rights violations

But the B.C. government told The Narwhal it is not reconsidering the Site C dam. “This does not impact planned construction timelines,” the Ministry of Indigenous Relations and Reconciliation said in an e-mailed statement.

“If successful, we are hopeful that an agreement could settle the ongoing litigation regarding Site C, [and] also help us to create a more positive relationship with Prophet River and West Moberly moving forward,” the statement said.

Willson said legal cases against Site C have cost the two nations more than $1 million, and the treaty rights case will cost “millions” more.

The nations raise money for Site C legal bills $100 at a time through their yellow stakes initiative.

Yellow stakes were used by BC Hydro contractors to mark the centre line for a provincial highway that must be relocated out of the Site C flood zone. The highway, whose relocation will cost at least $530 million, is slated to run past Indigenous burial sites and a special cultural area for First Nations, who have been gathering for millennia at the spot at the confluence of Cache Creek and the Peace River.

A rare, ancient tufa seep within the Site C dam flood zone. Photo: Garth Lenz

The Narwhal previously filed a Freedom of Information request asking BC Hydro for the total amount it had spent on legal fees related to the Site C dam. BC Hydro responded that the total amount was subject to attorney client privilege, and did not release the information.

BC Hydro financial reports show that the public utility paid $4.3 million over a recent one-year period (April 1, 2017 to March 31, 2018) to the Vancouver law firm Fasken (formerly known as Fasken Martineau DuMoulin LLP), which represents BC Hydro in the treaty rights case against Site C.

The firm, which has a long history of representing governments and resource companies in legal cases against First Nations, also represented BC Hydro during the joint federal-provincial environmental assessment hearings on Site C and on what it refers to as other “Aboriginal matters” related to Site C.

Fasken Martineau DuMoulin LLP received an additional $29 million from BC Hydro from 2011 to 2017, according to BC Hydro financial reports.

Three years into an estimated nine years of construction, most clear-cut logging for the Site C dam has taken place around the eastern flank of the Peace River Valley near Fort St. John, where the dam structure will be built. The rest of the valley is still relatively intact.

“Some of the old growth forest we’re trying to protect has been cut,” Willson said. “A tree will grow back. There’s nothing that can’t be undone.”

Low elevation forest in the Site C flood zone. Photo: Garth Lenz

Tim Thielmann, legal counsel for West Moberly First Nations and Prophet River First Nation, said he could not discuss the content or timing of the discussions.

“West Moberly and Prophet River continue to be opposed to the project,” Thielmann told The Narwhal.

“They continue to fight to prevent their treaty rights from being infringed by the cumulative effects of the three dams on the Peace River, and they are fully prepared to go to trial and obtain a judgement in advance of any Site C flooding if that is what they need to do.”

Sarah Plank, communications director for the Ministry of Indigenous Relations and Reconciliation, said the ministry can’t comment on the format and structure of the discussions.

“The discussions are in the early stages and they’re confidential,” Plank told The Narwhal.

The government said the parties “will continue trial preparations as discussions proceed on alternatives to litigation.” The parties appeared in court in late February and proposed a case plan for a 120-day trial commencing in 2022.

“We’re willing to listen to what they have to say, but we’re still filing our papers,” Willson said. “If we don’t like what we hear at the negotiating table we’ll walk away.”

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For eight years, Graham Lane headed a watchdog commission that raised red flag after red flag about the Keeyask dam hydro project on Manitoba’s Nelson River.

Politicians ignored the warnings and in 2012 Lane resigned as chair of Manitoba’s Public Utilities Board, concerned that Manitoba Hydro had strayed far from its main purpose — to provide low cost energy to Manitobans.

Now the retired chartered accountant is speaking out in the hopes of stemming the losses from the Keeyask dam project and a related transmission line, which he calls “an albatross around the necks of Manitobans.”

“In Manitoba basically everything has gone wrong,” Lane told The Narwhal. “It’s quite a disaster.”

Even though the utilities board kept flagging “runaway expenses and changing markets” as reasons to reassess the projects, Lane said the provincial government “just kept going” while the price tag for the dam and transmission line soared from $9.8 billion to almost $14 billion, with the dam’s final cost potentially $2 billion more.

“I’d had enough. I hung up my skates. I waited my year away. And then I started writing columns about it.”

‘Vast majority of Canadians don’t even know what Keeyask is’

The lesser known Keeyask dam joins B.C.’s Site C dam and Labrador’s Muskrat Falls dam on the list of hugely over budget big hydro projects currently under construction in Canada.

“Keeyask seems to fly beneath the radar,” said Garland Laliberte, a dean of engineering emeritus at the University of Manitoba. “Muskrat Falls gets a lot of exposure and even Site C gets more coverage. I think the vast majority of Canadians don’t even know what Keeyask is let alone what problems it’s causing in this province.”

Four years into construction 730 kilometres northeast of Winnipeg, the Keeyask dam will inundate 93 square kilometres of the Nelson River and boreal taiga lands or “snow forests” of pine, spruce and larch. It will destroy spawning areas and other habitat for fish such as sturgeon and result in habitat loss, alteration and fragmentation for caribou, moose and beaver.

Like the Muskrat Falls and Site C dams, the Keeyask project will also have a significant impact on Indigenous peoples, eliminating trapping, fishing and hunting sites in the traditional territory of Treaty 5 nations. The dam, which will be built at Gull Rapids, is named after the Cree word for gull.

With three large dams in the works, Canada is bucking the trend in Europe and North America, where the unacceptable price tag and profound social and environmental impacts of large hydro projects means that more big dams are being dismantled than are being built.

Keeyask dam map. Image: Manitoba Hydro

Laliberte said the global energy market has changed far faster than Canada’s politicians realized, as the price of wind and solar energy plummets, new energy storage options become available and the cost of building large hydro dams soars, in part because of hefty payouts to affected Indigenous communities.

Manitoba Hydro, for instance, has paid $169 million to First Nations who will be impacted by the project and is expected to pay out another $100 million.

“I think the main driver is politicians not understanding the market and thinking that it’s good to be seen to be investing, in all three cases, in renewable energy and thinking it’s going to fly,” Laliberte said in an interview.

“And our politicians were too busy doing other things and they believed that the market doesn’t change. And, of course what happened is that the speed of change now is so much greater than it was even 10 years ago and these guys went out on a limb and they got caught.”

Coalition warns of ballooning Keeyask costs

LaLiberte is a founding member of a grassroots Manitoba group called the Bipole 111 Coalition. The coalition was established by engineers — most of them retired from careers in Manitoba Hydro, the University of Manitoba and the consulting world — to inform provincial hydro customers about the impacts of proceeding with construction of the transmission line and Keeyask dam.

The coalition’s members include dozens of farmers in the Red River Valley whose land is being expropriated for a transmission line that will run through the heart of Manitoba’s most productive agricultural region, dividing farm lands.

The coalition is named after the line that will carry Keeyask’s energy southward, where Laliberte estimates it will be sold to U.S. markets for an average of $36 per megawatt hour even though it will cost about $140 per megawatt hour to produce. One consultant for the utilities board warns the Keeyask dam could balloon by another $2 billion by the time it becomes partly operational in 2021.

Lane said coalition members call the Keeyask dam “our stranded white elephant.”

“The Americans will buy [the power.] Of course they’ll buy it. But they’ll only buy it at a price that works for them.”

Watchdogs undermined

The Keeyask, Site C and Muskrat Falls dam projects have much in common besides their hefty environmental footprint, which includes poisoning fish, a traditional food source for Canada’s Indigenous peoples, with methylmercury.

In all three cases, the independent watchdog body that normally looks out for the public interest was removed, hamstrung or ignored by provincial politicians who were determined to push ahead with big hydro projects even though their electricity was not needed domestically.

B.C., for instance, has had so much extra power that BC Hydro has paid independent energy producers not to generate electricity. And as the Site C project moved forward, BC Hydro slashed its budget for energy conservation programs — programs that according to BC Hydro had saved about as much energy as the Site C dam would produce.

In each province, a change in government brought an opportunity to cancel the projects as costs surged and far cheaper, more nimble and less destructive renewable energy sources became readily available. Yet those opportunities went unseized, with newly elected governments of different political stripes continuing construction and approving cost overruns of billions of dollars.

That has led to another striking parallel: when the dams are complete, after seven to nine years of construction, their electricity will be sold for considerably less than it costs to produce, leaving hydro customers in all three provinces on the hook financially.

The impending pinch is already being felt in Newfoundland and Labrador, where the cost of the Muskrat Falls dam on the Churchill River, now nearing completion, has jumped from $6.2 billion to $12.7 billion. Hydro rates are expected to double as a result, and households can calculate how much their bills will likely increase.

Manitoba Hydro recently asked for annual 7.9 per cent rate hikes. Instead, a rate hike of 3.6 per cent was approved this year.

But it’s only a matter of time before the “amazing amounts of money” spent on the Keeyask dam and transmission line need to be accounted for, Lane said.

“If costs get to the point where you’ve got government siphoning it off to the sides so that ratepayers aren’t going to be too shocked when they go to the polls this is a bad thing.”

In B.C., the $10.7 billion bill for the Site C dam — which will flood 128 kilometres of the Peace River and its tributaries, destroying prime farmland, Indigenous burial sites and habitat for more than 100 species vulnerable to extinction — will only come due if the project becomes operational about five years from now.

In October, a B.C. Supreme Court judge ordered that a full civil trial, to determine whether or not the Site C project violates treaty rights, must take place before the reservoir is flooded, raising the possibility that British Columbians could be left with a stranded asset if two Treaty 8 First Nations win the case.

Site C dam construction along the Peace River, B.C. Photo: Garth Lenz / The Narwhal

Viability of large hydro dams a question in clean energy future

Lane and Laliberte question whether large hydro dams are still financially viable because there are much cheaper and faster ways to produce clean electricity.

“I can’t see another dam being built in Manitoba,” Lane said. “There’s probably enough river opportunities to build a couple more. But they’re gone. There’s no need for them with the renewables and even with natural gas, the energy efficiencies and everything else under the sun.”

Laliberte pointed to a recent call for bids to replace coal plants in Pueblo, Colorado. Out of 430 bids, 350 were for renewables, he said. The median price for wind power was US $18 per megawatt hour, and the median price for wind power with storage was US $21 per megawatt hour.

The Site C dam’s power, by comparison, will cost at least $120 per megawatt hour to produce, according to independent energy experts such as Eoin Finn, a former partner with KPMG, one of the world’s largest accounting and consulting firms.

“You’ve got too much electricity and you’ve got a lot of hydro in your system now in B.C.,” Laliberte pointed out. “So you have a lot of storage already. Can you really justify Site C in the B.C. circumstance on the basis of storage? I would be surprised.”

“So how are we going to sell this electricity? What are we doing in Canada just because we have hydro and we can claim that it’s renewable, although many would challenge how renewable it is considering what the impact is on the environment?”

Among other environmental impacts, large dams are major emitters of greenhouse gas emissions during construction, due to vast amounts of concrete used to build them and the burning of slash piles when tracts of land are cleared for transmission lines. Reservoirs are also significant carbon emitters, with about 80 per cent of emissions coming from methane, a greenhouse gas 34 times more potent than carbon dioxide.

A November 7 statement from the Bipole 111 coalition and the Manitoba Energy Council noted that Manitoba Hydro’s claim that the transmission line was needed for reliability has never been proven, pointing out that Manitoba Hydro’s reputation as the “crown jewel” of the province is in “tatters.”

“The proponents in the NDP provincial government and Manitoba Hydro who championed the expansion are long gone, living comfortably on pensions and termination benefits,” noted the statement.

The energy council, established this month by Bipole 111 coalition members, aims to find ways to promote the “economic, efficient and beneficial” use of electricity moving forward.

Dams face costly retroactive scrutiny

Faced with Manitoba Hydro’s insolvency, the Manitoba government recently announced a $2.5 million review to examine if the projects were based on sound economics and why the Keeyask project — like the Site C and Muskrat Falls projects — was approved in the absence of domestic demand.

The Manitoba review comes on the heels of a $37.5 million inquiry launched by the Newfoundland and Labrador government to determine why the Muskrat Falls dam proceeded, why it is so over budget, and whether the decision to exempt it from independent review was justified. As inquiry hearings continued last month, 500 workers were sent home from the Muskrat Falls construction site because there was no money to pay them.

The appointment of former B.C. premier Gordon Campbell to head the Manitoba review concerns Lane, who pointed out that Campbell has little experience in this area.

Campbell championed the Site C dam, announcing it as a $6.6 billion project when he was premier.

Campbell’s government also changed the law to remove the watchdog B.C. Utilities Commission (BCUC) from scrutinizing the Site C project to determine if it was in the financial interest of BC Hydro customers. A two-year BCUC review in the 1980s rejected the dam, which was also turned down in the early 1990s by BC Hydro’s board of directors on the grounds that its energy was not needed and the project was too expensive and unnecessarily destructive.

Campbell, now the CEO of Hawksmuir International Partners, a company that appears to have no website, has until December 2019 to deliver his report.

Lane said he believes the review is a “set up” to help Manitoba’s ruling Conservative government “whack the NDP before the next election.”

Manitoba’s NDP government approved the Keeyask project and the Conservative provincial government opted to continue the project after it was elected in 2016, despite repeated warnings that it was a boondoggle.

“You can just see it coming,” Lane said. “They’ll be labelling the waste and the cost…but it won’t necessarily be an open transparent process.”

Lane and other members of the Manitoba Energy Council are calling for a transparent, independent public inquiry to determine why the checks and balances of Manitoba’s system failed. Such an inquiry would allow the books to be “thrown open” and the ability to call witnesses so “people could actually understand what’s happened over this period of time,” said Lane.

In one column for the Winnipeg Sun, Lane wrote that, “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.”

“None of those parties will emerge looking good, but it is time to ensure a ‘never again’ future for key provincial infrastructure,” he wrote.

Lane also said that special attention needs to be placed on the “lack of action” by Manitoba Premier Brian Pallister, who had an opportunity to cancel the project after he was elected.

Pallister, along with his cabinet and advisors, failed to “grasp the immensity of the problem and take appropriate actions,” Lane said.

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Calls for an independent safety review of the Site C dam project are mounting following a large landslide near the project’s worksite that has blocked the only road to a small community and led to the evacuation of residents by boat.

Retired BC Hydro engineer Vern Ruskin said this week’s mushrooming slide is a reminder that the project is located in an area prone to landslides and that a major landslide close to the Site C dam structure could compromise it.

“If the landslide is a long way off and all they get is a wave then the dam can withstand it,” Ruskin told The Narwhal. “If the landslide is close enough it could damage the dam structure and it may fail.”

Ruskin, who directed the team that designed the five dams originally planned for the Peace River, including Site C, said he has repeatedly asked the B.C. government and BC Hydro to conduct an independent safety review of the project due to its location in a valley with a history of large landslides and because of a change to the design of the dam structure.

When former B.C. premier Gordon Campbell announced his government would proceed with the Site C project in 2010, the dam structure was depicted as a very slight arc. But in 2014 an L-shaped structure — which Ruskin says to the best of his knowledge has never been used anywhere in the world for an earthen dam — was revealed when former premier Christy Clark announced final approval of the project.

The new structure is described by one engineering firm that helped design it as “unique” and an “innovative solution” to stabilize the original river valley wall.

Ruskin said that is all the more reason for an independent safety review of the $10.7 billion dam, the largest publicly funded infrastructure project in B.C.’s history.

“Someone outside of BC Hydro has to do the review,” said Ruskin, who taught engineering economics at UBC for 14 years. “It seems to me that if you are going to do something completely different you should test it.”

Dam safety under fire around world

Announced in 2010 as a $6.6 billion project and given final government approval in 2014 as an $8.8 billion project, the Site C dam’s price tag climbed by an additional $2 billion late last year.

Dam safety practice around the world “has been shaken” by the recent collapse of tailings pond dams at B.C.’s Mount Polley mine and in Brazil, the Site C project’s technical advisory board noted in its February meeting minutes. The board, charged with providing technical reviews and engineering advice, also noted the 2017 failure of California’s Oroville dam spillways following heavy rains, which led to the evacuation of more than 180,000 people downstream.

“Considerable re-evaluation of site documentation to better inform future dam safety assessment is currently underway in the industry,” the board noted in its minutes. The board also said it was “of the view” that the Site C project should “engage in these evaluations to be able to assert that it is adopting Best Available Practices.”

The minutes were disclosed in affidavits filed for a First Nations court case seeking an injunction to stop work on the Site C project until a treaty rights legal case is resolved.

The Narwhal had previously requested technical advisory board meeting minutes through a Freedom of Information request, but the response was so heavily redacted it was impossible to determine if the board had any dam safety concerns.

In a statement e-mailed to The Narwhal, the B.C. energy ministry said BC Hydro has conducted extensive engineering studies into the geology of the Site C project area — including the dam site — for decades.

“The issue of historical slides in the area is well documented and its being addressed by BC Hydro with the excavations and stabilization measures that have been taking place at site since construction started in 2015,” said the statement.

The Peace valley landslide, which began overnight on Saturday, has left engineers scrambling to survey the unstable slope close to one entrance to the dam worksite, which is not affected.

Landslide near dam site forces evacuation orders

The landslide, which continues to gather momentum, has displaced five million cubic metres of earth — almost half the amount BC Hydro has excavated from the river’s north bank over the past three years to prepare for building the Site C project’s river diversion tunnels and the dam structure.

On Tuesday the Peace River Regional District — which has issued evacuation orders for three properties — evacuated people by boat who opted to leave their homes in Old Fort, a community of about 50 residences that has been isolated by the slide.

BC Hydro spokesperson Mora Scott said in an e-mail to The Narwhal that “there is no evidence to suggest that the slide that took place over the weekend is related to Site C or any of the work taking place on the project.”

The slide occurred immediately below a former gravel pit operation, where piles of stockpiled construction materials were clearly visible.

According to Peace River Regional District documents, when the gravel pit operation closed down in 2015, the B.C. ministry of energy and mines advised the owner that any future mining activities at the site would require a mine plan developed by a qualified professional, due to “past geotechnical and slope stability issues.”

“We all know the slopes are very unstable in the valley,” said Ken Boon, president of the Peace Valley Landowner Association, representing 70 landowners who will be impacted by the Site C dam. “An independent review of the Site C safety issues would be prudent.”

Arthur Hadland, the former Peace River Regional District director for the area that includes Old Fort, has repeatedly asked successive provincial governments to establish an independent panel of academic and non-academic geological experts to investigate the safety of residents of Old Fort, Taylor and Alberta, downstream from the Site C dam.

Hadland said in an interview that his concerns were heightened following BC Hydro’s confirmation in August that the Site C dam will be anchored to shale bedrock instead of to firmer bedrock such as granite.

“Shale is old mud,” said Hadland. “It’s 80,000 year-old mud. When it’s exposed to air and a little bit of moisture it turns back to mud.”

In August, BC Hydro spokesperson Dave Conway told local media that the Crown corporation has not been searching for stronger bedrock at the dam site, where it has removed 11 million cubic metres of earth in an effort to resolve geotechnical issues that have added to the project’s escalating cost.

“We know what rock is here,” Conway said.

“The dam is going to rest on shales, and the powerhouse and spillway structures are going to be anchored into shale materials as well.”

Ruskin said it’s not uncommon to build dams on shale, even though it is weaker than other types of bedrock. But what concerns him is the combination of shale and the new L-shaped design structure that includes construction of a roller compacted concrete buttress that will serve as the foundation for the generating station and spillways.

“That has never been done before,” he said. “They are pioneering.”

“There’s nothing wrong with a new idea,” Ruskin said, as long as the new design passes a safety review by a committee independent of BC Hydro and its contractors. Such a committee should include representation from the U.S. Army Corps of Engineers, which operates and maintains 700 dams, because it has extensive experience building on shale, he said.

Slope instability identified as issue during environmental review

The Joint Review Panel that examined the Site C project for the federal and provincial governments noted that slope instability and landslides in the valley “would potentially adversely affect” the project and “could result in landslide-generated waves or overtopping of the dam that could result in direct damage to infrastructure.”

In its most recent quarterly Site C report, made public in late September, BC Hydro referred to a June rockslide near construction of one of two river diversion tunnels as a “minor geotechnical event,” noting that remediation work is underway to minimize schedule impacts.

BC Hydro also stated in the same report that “changes to geotechnical ground conditions remain a risk to the project schedule and cost.”

The energy ministry said BC Hydro has identified 16 other earthen dams around the world that rest on a similar shale foundation. There are 57,000 large dams in the world, according to the U.S. non-profit group International Rivers.

The valley where the Site C reservoir would sit has experienced huge landslides in the past.

In 1973, a landslide in the future Site C reservoir area hurled 14.7 million cubic metres of debris a distance of almost one kilometre, damming the Peace River for 12 hours and generating a wave so high it snapped trees more than 20 metres above the river.

Sixteen years later, a slide at the nearby Halfway River, which would be flooded by Site C, sent 3.6 million cubic metres of debris into the Peace, blocking it for six hours and sending the river north.

And in 2016, a series of landslides at Lynx Creek, a Peace River tributary that would also be inundated by Site C, sent a plume of toxic metals, including arsenic, barium, cadmium, lithium and lead, into the Peace River.

According to BC Hydro technical reports, engineers expect as many as 4,000 landslides will be triggered by the Site C reservoir, which will be up to 50 metres deep, several kilometres wide and stretch for a total 128 kilometres along the Peace River and its tributaries — about the same distance as driving from Vancouver to Whistler.

Many of the landslides will be small, but some will be so large they are expected to generate waves reaching so far above the reservoir they may damage a planned new bridge across the Halfway River, according to BC Hydro reports.

BC Hydro says the Site C project is designed “to the highest recommendations” of the Canadian Dam Association, to withstand major events such as earthquakes and floods, and that the project design is in keeping with international best practice.

* The article has been updated from an earlier version that stated the landslide began following intense rain. In fact, there was no rain the night of the landslide.

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