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

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

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

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

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

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

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

No public access to detailed Site C information

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

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

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

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

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

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

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

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

BC Hydro directors will help oversee Site C project

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

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

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

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

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

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

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

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

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

Meanwhile, in Labrador and Manitoba…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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BC Hydro executives have mismanaged the Site C dam’s overall budget and cost control process, and they are “not capable” of accurate estimates or controlling costs on the $10.7 billion project, according to an affidavit filed this week by former BC Hydro CEO Marc Eliesen.

“The necessary experience and due diligence rigour required for managing a major hydro project such as Site C is deficient among the executive at BC Hydro,” says Eliesen in the affidavit, noting that it has been more than 30 years since BC Hydro constructed a major generating station.

“The knowledge and expertise required, which formerly resided in the company, has retired or moved on.”

The 30-page affidavit, filed in B.C. Supreme Court as part of a new legal case against Site C by two Treaty 8 First Nations, reads like a Site C dam financial WhoDunnit.

The question that comes to mind is: what did BC Hydro know and when did it know it?

Unpacking Site C’s escalating cost overruns in nail-biting detail, Eliesen quotes from statements that BC Hydro made to the B.C. Utilities Commission (BCUC) on August 30 that Site C was “on time and on budget,” and would cost $8.335 billion.

Just thirty-five days later, the affidavit notes that Chris O’Riley, BC Hydro’s president and chief operating officer, informed the BCUC that BC Hydro had encountered some “geological and construction challenges” and the project’s cost had climbed by $610 million — due to a one-year delay in meeting a scheduled diversion of the Peace River to build the dam structure.

At the same time, O’Riley informed the commission that Site C’s $440 million Treasury Board reserve had been exceeded by $170 million. That placed Site C’s revised price tag at close to $9 billion, only two years into a nine or ten-year construction project.

“It is my expert opinion that BC Hydro knew, or should have known, when the August 30th report was submitted to the BCUC, that the costs for the project were going to be higher than disclosed,” Eliesen says in his affidavit.

“If BC Hydro knew the costs were reasonably likely to be higher than disclosed, they violated their obligation to the commission to be fully transparent and support the commission’s inquiry. If BC Hydro honestly did not know at the time the August 30 filing took place that costs would escalate, then BC Hydro was not competently managing its project as it claimed.”

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

A ‘paucity’ of information about $2 billion price jump

Eliesen, who is also the former chair and CEO of Ontario Hydro and the Manitoba Energy Authority, points out that O’Riley subsequently told the BCUC that “nothing has occurred that would suggest to us that we are facing the type of large overruns” speculated in a September 2017 report by Deloitte LLP, one of Canada’s leading auditing firms.

Deloitte concluded that Site C’s price tag could exceed $10 billion and might reach as high as $12.5 billion.

Yet less than two months after O’Riley’s statement, Premier John Horgan announced that Site C’s capital costs had escalated by another $2 billion, or 20 per cent.

Horgan set Site C’s new price tag at $10.7 billion when he said in December that the project would proceed, claiming it was past “the point of no return,” an assertion disputed by project financing experts.

“A paucity of information has been provided as to what has driven the additional $2 billion in project costs,” notes Eliesen.

“Clearly, the budget revision exercise that took place in November determined that the additional $2 billion in cost was warranted, while on October 14, 2017, Mr. O’Riley told the Commission that there would be no further budget increases.”

“Either BC Hydro knew, or should have known, about the looming budget increases related to future contracts.”

The average compensation for the top four executives at BC Hydro was $453,350 in 2015-2016.

This 30-page affidavit, filed in B.C. Supreme Court as part of a new legal case against Site C by two Treaty 8 First Nations, reads like a Site C dam financial WhoDunnit. https://t.co/5rM9jnmvsU

— DeSmog Canada (@DeSmogCanada) February 3, 2018

Trouble afoot with major Site C civil works contracts?

Five pages of Eliesen’s affidavit focus on major Site C contracts and on what BC Hydro knew about the performance ability of two of the corporations it hired or anticipated hiring.

The affidavit highlights troubling information that Eliesen says could help push Site C’s cost to what will “likely” be $12 billion or more. He also says the project will also likely be delayed by at least another year, putting it at least two years behind schedule.

Eliesen singles out BC Hydro’s recent handling of the second largest Site C contract — a civil works contract to build the dam’s generating station and spillways — as one cause for financial concern.

As a result of the unintentional release of redacted parts of the Deloitte report, it was revealed that BC Hydro estimated the second civil works contract would cost about $1.255 billion — a sum Eliesen says is “much too low.”

He said it is his expert opinion that the contract will exceed $2 billion, a 50 to 70 percent increase over BC Hydro’s August 2017 estimate.

Eliesen also notes that BC Hydro recently experienced “major contract problems” with Flatiron Contractors Canada Ltd., one of four corporations in the partnership BC Hydro has selected as its preferred contractor for that civil works contract. Flatiron has a 27.5 per cent share in the joint venture.

The affidavit points out that Flatiron, in a joint venture with Graham Construction Ltd., was awarded the contract for the Interior to Lower Mainland Transmission Line, a project that Eliesen says was “significantly over budget and delayed.”

As explained by the previous Liberal government, the “serious delays were triggered by faulty steel towers, problems with [the] contractor’s environmental management and protection plans and turnover with its contractors,” states the affidavit, noting that BC Hydro characterized the problem as a “failure to perform.”

BC Hydro has not disclosed the final costs of the transmission line, and arbitration related to the project continues.

“It is surprising that BC Hydro’s due diligence would still qualify Flatiron” to be part of the joint venture for Site C’s civil works contract, Eliesen says in the affidavit.

And then there was the question of Petrowest

Eliesen also questions why BC Hydro qualified Calgary-based Petrowest Corporation to be part of the Peace River Hydro Partnership (PRHP), the recipient of Site C’s largest civil works contract.

He notes that only a month after the $1.75 billion contract was awarded the media reported that Petrowest was operating on “borrowed time from its lenders.”

Petrowest went into receivership last August.

BC Hydro, Eliesen notes, “did not provide an explanation as to how it was unable to determine Petrowest’s compromised financial position when it awarded the contract.”

“It is my expert opinion that the financial failure of Petrowest not only has created a period of instability that has contributed to PRHP’s inability to meet its planned work schedule in the short term, but that it will also continue to have a negative impact on project cost and budget at least through the medium term.”

Eliesen also records that “serious and ongoing difficulties” between BC Hydro management and the remaining Peace River Hydro Partnership management have impacted Site C’s cost and schedule.

Geotechnical conditions are one area of disagreement, with the PRHP alleging that conditions in an area that has already experienced several “tension cracks” — landslides — differ from those disclosed by BC Hydro. BC Hydro disputes that claim.

Eliesen says it is not uncommon for contractors to seek additional payment for things such as unforeseen conditions or construction delays.

But “the number and severity of these claims” and the “stark differences” in views between BC Hydro and the Peace River Hydro Partnership “reflect a dysfunctional relationship that is not conducive to construction of a large hydro dam,” his affidavit states.

Among other issues, the affidavit also notes that BC Hydro was working with two sets of Site C budgets and schedules: its private set and the set that was made publicly available in December 2014 when former premier Christy Clark announced final approval for the dam, then an $8.8 billion project (including the Treasury Board reserve.)

Eliesen, who has multiple years of experience working in utilities while major projects were constructed, including Manitoba’s Limestone Generating Station, said in his affidavit that, “I have never experienced, nor have I heard about, a situation where there are two sets of budgets and two schedules.”

West Moberly First Nations and Prophet River First Nation are seeking an injunction to stop work on Site C until their legal case can be heard.

In January, the two Treaty 8 First Nations filed notices of civil action, claiming that Site C and two existing dams on the Peace River infringe on rights guaranteed to them in Treaty 8.

The nations have requested that the court declare approvals for Site C issued by the B.C. and federal governments to be “unconstitutional.”

Tim Thielmann, a Victoria lawyer who is part of the new legal team assembled by the First Nations, said the nations hope their request for an injunction will be heard in the early spring.

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

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

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

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

“We believe this number to be zero.”

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

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

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

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

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

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

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

— DeSmog Canada (@DeSmogCanada) October 17, 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The National Energy Board (NEB) is a “captured regulator” that has “lost touch with what it means to protect the public interest.”

That’s what Marc Eliesen — former head of BC Hydro, Ontario Hydro and Manitoba Hydro, and former deputy minister of energy in Ontario and Manitoba — told the NEB Modernization Expert Panel on Wednesday morning in Vancouver.

“The bottom line is that the board’s behaviour during the Trans Mountain review not only exposed the process as a farce, it exposed the board as a captured regulator,” he said to the five-member panel.

“Regulatory capture exists when a regulator ceases to be independent and objective.”

The Trans Mountain pipeline was reviewed with what many consider a heavily politicized NEB process, one that Trudeau had committed to changing prior to issuing a federal verdict on the project.

That process included what Eliesen describes as gutted environmental legislation, the removal of “essential features of a quasi-judicial inquiry” including the cross-examination of evidence and the limiting of participation of intervenors in such a way it “predetermined the outcome in favour of the pipeline proponent.”

Eugene Kung, staff counsel at West Coast Environmental Law, said in an interview with DeSmog Canada that the hearings for the project were the worst he’s seen in almost 10 years of practising regulatory law.

But that doesn’t seem to be an accident. Eliesen — who withdrew as an intervenor from the NEB review of the Trans Mountain project in 2014 due to the “fraudulent process” — argues the problems go far deeper than just the Trans Mountain review, predominantly linked to the “revolving door” between industry and the board.

“This ‘modernization’ is some spinmaster’s term,” he said. “It’s about public trust and the fact the NEB has lost this trust to the Canadian public.”

Move of NEB Head Office to Calgary Arguably Compromised Independence

In 1991, the NEB’s head office was moved to Calgary, and legislation was changed to require all permanent members to reside in Calgary.

It’s a decision that Eliesen says was completely unexpected and ultimately a political move by former Prime Minister Brian Mulroney; most other regulatory agencies are located in Ottawa to prevent being influenced by the industry in which they’re supposed to regulate (including finance regulators, even though Toronto is often considered Canada’s finance city).

If it was indeed politically driven, the plan seems to have worked.

More than two-thirds of the staff didn’t move to Calgary, and their positions were subsequently filled by former employees of the oil and gas sector. This has resulted in what some call a “revolving door” between the two; as Eliesen pointed out in his presentation, some former NEB chairpersons have been inducted into the Canadian Petroleum Hall of Fame.

“I’m not suggesting any nefarious activities,” he says. “It’s just that you adopt the headspace and the attitude of the energy industry of Alberta. When you have the legislation changed as well to ensure that all the permanent members reside in Calgary, then you have a major, major bias.”

It’s something he argues got worse under former prime minister Stephen Harper, who took full advantage of it in his final months (appointing many former industry veterans to key positions with the board, including Steven Kelley, who previously worked as a consultant for Kinder Morgan on the Trans Mountain project).

Even one of the five members of the NEB Modernization Expert Panel previously served as president of the Canadian Energy Pipeline Association. That same person, Brenda Kenny, signed a 2011 letter to key cabinet ministers petitioning for regulatory overhaul.

“She is in a real conflict of interest,” Eliesen says. “She’s the last person to be on a panel trying to evaluate how to bring back to the public trust to the National Energy Board.”

How to Fix the National Energy Board, Canada's Captured Regulator https://t.co/mHjDbb2iRj #cdnpoli #EnergyEast #TransMountain @james_m_wilt pic.twitter.com/8So7hzWUQ1

— DeSmog Canada (@DeSmogCanada) February 10, 2017

Many Structural Changes Required to Fully ‘Modernize’ the NEB

Kung, who also presented to the expert panel on Wednesday, expressed concerns about the relationship between the NEB and industry. He says there are many structural ways that such capture can be fixed.

Currently, the NEB receives a majority of its funding from industry, something Kung suggests should be addressed.

Its “very important role” in data collection and forecasting (such as the exhaustive “Canada’s Energy Futures” reports) don’t currently consider climate commitments such as the Paris Agreement, with the latest NEB report imagining a “business-as-usual” world that features an increase of four to six degrees Celsius in average global temperatures. That’s another thing that Kung says needs to change in the modernization.

Patrick DeRochie — climate and energy program manager at Environmental Defence — agrees, arguing that the NEB needs to better align climate and energy policy: “It’s not there right now. With this energy transformation we’re seeing for renewables right now, it’s not adequate. We need to bring that into the 21st century.”

(Conversely, Eliesen disagrees and suggests the NEB be solely a quasi-judicial agency and the energy information and advisory mandate be removed).

A key concern for Kung is also about NEB personnel. He acknowledges the board possesses technical expertise and that it’s tricky to find that kind of knowledge in people who haven’t worked in the industry at some point.

“But the way you can separate it structurally is making their role slightly different so they’re not making a decision, for example, about national or public interest,” he says. “Because that’s an impossible decision to make by a captured regulator.”

Proposed Solutions Include Replacing Board Members, Relocating Head Office

Eliesen proposed two major solutions to the review panel.

First, remove all current board members and replace them with people that reflect a broad range of background and expertise, not just the oil and gas industry. And secondly, relocate the NEB’s head office back to Ottawa.

These two decisions would create a firewall of sorts between industry and the board.

In addition, he suggested that environmental assessments be undertaken outside of the NEB, enforcement of pipeline safety be increased, and proponents be required by the NEB to provide alternative routes for pipelines.

Vancouver was only the third stop of 10 for the expert panel. The final “engagement session” in Montreal will conclude on March 29.  The panel is required to submit a report and recommendations to the Minister of Natural Resources around May 15.*

It’s a timeline that DeRochie suggests has made the process “really rushed,” noting that some of the 12 discussion papers weren’t even posted on the NEB Modernization Panel website by the time the first engagement sessions started in Saskatoon. However, DeRochie presented at the engagement session in Toronto on Feb. 1, and said that he went in “kind of cynical” but emerged feeling like they “really did seem like they wanted to engage us and fix this regulator.”

“It’s either get this right or face a bunch of political and legal challenges to every single energy project moving forward,” he says. “I think all stakeholders — industry, government, indigenous communities and ENGOs — want to avoid that.”

* Update: Feb 9, 2017. This article originally stated the panel report was due March 31, as stated on the National Energy Board's website. However, the date has been updated to May 15, as stated in the National Energy Board's terms of reference for the review panel.

Images: Natural Resources Minister Jim Carr. Photo: Canada 2020 via Flickr (CC BY-NC-ND 2.0)

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BC Hydro officials and members of Premier Christy Clark and Energy Minister Bill Bennett’s offices were all involved in a coordinated attempt to discredit DeSmog Canada’s reporting on the $8.8 billion Site C hydroelectric dam, according to documents obtained through Freedom of Information requests.

The documents detail a flurry of e-mails following a DeSmog Canada story that quoted former BC Hydro CEO Marc Eliesen saying that Site C was proceeding without due diligence, would lead to escalating hydro rate increases and was “scheduled to become a big white elephant,” a story later referenced by the New York Times.

BC Hydro officials were concerned that major B.C. media would pick up on the DeSmog Canada story, based largely on a BC Hydro progress report to the B.C. Utilities Commission. That report noted that Site C had fallen behind on four out of seven key milestones and outlined project risks and reasons why Site C had spent more money than anticipated by the end of last March, while saying that the project’s overall forecast still remained on track.

“This is expected to generate media interest,” Craig Fitzsimmons, BC Hydro’s manager of communications and issues management for Site C, flagged in e-mails to the Premier’s office and Bennett’s office, informing them that numbers in the article came from the Crown corporation’s own report.

The Premier’s office directed BC Hydro to respond to the article immediately even though it was the start of the Canada Day long weekend, a sign of the top priority Clark’s team has placed on controlling the story line on the Site C dam, the most expensive publicly funded project in B.C.’s history.

Two days later, internal Hydro e-mails show, BC Hydro CEO Jessica McDonald took aim at an opinion editorial that had been published more than one month earlier in the print and online editions of The Province newspaper.

The opinion piece was based entirely on a DeSmog Canada story published the previous day about BC Hydro’s ongoing civil law suit against some of the Peace Valley farmers and First Nations members involved in the Rocky Mountain Fort winter camp, which delayed Site C clear-cutting of a B.C. heritage site for two months. The piece quoted the head of the B.C. Civil Liberties Association who called the lawsuit, which seeks financial damages for BC Hydro from individuals, a matter of “grave concern” because of its potential to curtail freedom of expression.  

McDonald, saying erroneously that the opinion piece had changed a month after publication and now contained “commentary that is even more misleading than before” asked top staff if it were possible to “dust off” a one-month-old unpublished BC Hydro letter to the editor of The Province and “create a new piece that hits back.”

“I feel this is really important as we head into the Paddle for the Peace which is focused on the Boon’s property next weekend and will be very focused on stopping the federal authorizations based on our supposed unfairness,” wrote McDonald.

McDonald was referring to Ken and Arlene Boon, two of the Peace Valley farmers named in Hydro’s civil law suit, whose third-generation farmland and home were expropriated by BC Hydro in December for a Site C highway relocation. At the time the e-mail was written, BC Hydro was waiting for federal authorizations for Site C that were subsequently granted by the Trudeau government, even though First Nations leaders had requested that the permits be withheld.

According to the internal Hydro e-mails, McDonald said she wanted a statement drafted to say that information in the opinion piece was “inaccurate.” She also wanted her staff to make sure BC Hydro was “closely monitoring” some DeSmog Canada articles and to flag when there were updates.

McDonald wanted it to be made clear that BC Hydro supports freedom of expression and is taking legal action only to prevent people from physically blockading work on the project. But the documents also suggest that BC Hydro wanted to do more.

“I talked to Jessica and she would like to hit Sarah Cox hard for never contacting us for an interview on the issue, continuing to ignore our input, and then ramping up the rhetoric,” said an e-mail written by Danielle Van Huizen, a senior business advisor in McDonald’s office.

That prompted a quick reply from BC Hydro’s Site C spokesperson Dave Conway, who informed colleagues that Hydro had indeed been contacted for comment three times over a five-day period, by e-mail and phone.

Screenshots of documents obtained through Freedom of Information legislation indicating BC Hydro President Jessica McDonald would like to hit DeSmog Canada contributor Sarah Cox "hard" for her writing on Site C. 

“We will have to be careful what we write and be sure legal has a look at it,” advised Van Huizen in another email.

Two days later, BC Hydro issued a news release, approved by Bennett’s office and including text from a letter to the editor approved by the Premier’s office, saying there were “inaccuracies” in the five-week old Province opinion piece, and also saying that the piece had been “posted” more than one month later than its actual publication date.

That followed closely on the heels of a BC Hydro news release, approved by both the Premier’s office and Bennett’s office, which attempted to discredit DeSmog Canada’s story about Hydro’s progress report to the utilities commission, saying it contained “inaccurate statements.” 

BC Hydro President Jessica McDonald would like to hit DeSmog contributor Sarah Cox “hard” for her writing on #SiteC https://t.co/4GNzCYzNyG

— DeSmog Canada (@DeSmogCanada) January 17, 2017

At that point, DeSmog Canada sent a registered letter to Simi Heer, Hydro’s manager of media relations and issues management, asking BC Hydro to identify any factual inaccuracies so that they could be corrected. Heer, who later left BC Hydro, did not respond to the letter, or to e-mails and a phone call. BC Hydro has never contacted DeSmog Canada directly to request any story corrections.

Dozens of pages were redacted from BC Hydro’s 1,600-page FOI response on the grounds that they “were penned for the purpose of seeking or providing legal advice.” Other pages, including parts of e-mails written by McDonald about the opinion piece, were redacted on the grounds that releasing the full e-mails would constitute an unreasonable invasion of a third party’s personal privacy.

The FOI documents also reveal how top officials in the Premier’s office and Bennet’s office control other media relations regarding the Site C dam, as reported by the Vancouver Sun last week based on a DeSmog Canada FOI to the Premier’s office that is now publicly available.

Construction of the Site C Dam on the Peace River. Photo: Garth Lenz/DeSmog Canada

The Premier’s office and Bennett’s office directed the timing of various Site C announcements, including an announcement about the completion of a temporary bridge across the Peace River, which Bennett did not want BC Hydro to make too close to an April increase in hydro rates.

Both offices were also involved in the timing for an announcement about the completion of the $470 million lodge for Site C construction workers, which cost BC Hydro customers almost as much as Clark’s pre-election pledge to spend $500 million on affordable housing projects to help alleviate the Lower Mainland’s housing crisis.

The offices also vetted a BC Hydro press release, which included quotes from Clark and Bennett, announcing that a $470 million contract had been awarded to Voith Hydro Inc. to supply turbines and generators for the Site C dam.

According to Luc Bernier, a Canadian expert in Crown corporations, BC Hydro should have more independence from the government to ensure that sound decisions are being made.

Bernier said it is not unusual for governments to be kept apprised of developments on large publicly funded projects like Site C, and to control and to supervise these projects to a certain extent, because they are highly visible.

But directing day-to-day communications can lead to decisions being made for political reasons and not because they are in the best interests of the Crown corporation, said Bernier, who holds the Jarislowsky Chair in Public Sector Management at the University of Ottawa and is the former head of the Institute of Public Administration of Canada. 

“For the proper functioning of Crown corporations it should be more independent. We do put these organizations further away from politics to make sure the main reason to exist — in this case to produce electricity — is not done for political reasons.”

Public sector management expert David Zussman said the question of how independent Crown corporations should be from governments is a contentious issue right across the country.

“In recent years in particular there’s been a distancing of the Crowns from the government,” said Zussman, a former dean of the University of Ottawa’s School of Management and previous commissioner of the Public Service Commission of Canada.

“The trends today I would say are for greater independence of Crown corporations.” Hydro Quebec, for instance, is a far more independent entity than it was 30 years ago and Zussman said to the best of his knowledge it has “almost nothing to do with the government” today.

To achieve good governance, Zussman said Crown corporations “should operate independently from government on a day to day basis,” adding that what exactly that means is open to interpretation.

The FOI request to the Premier’s office also asked for e-mails and documents related to Site C’s most recent budget and timeline, but that information was not forthcoming. Fourteen pages of the response were redacted.

Screenshot of a consent order compelling BC Hydro to release documents requested by DeSmog Canada via Freedom of Information legislation.

One internal Hydro e-mail from Michael Savidant, BC Hydro’s Site C commercial manager, addressed Site C project risks outlined in Hydro’s progress report and referenced in DeSmog Canada’s story. But Savidant’s points were not included in Hydro’s news release about the story or in BC Hydro’s list of key messages, vetted by Bennett’s office, for any other media inquiries about the report.

“On the potential for cost overruns — yes if those things happen there will be cost increases,” Savidant wrote to Fitzsimmons and Chris Sandve, Bennett’s former chief of staff who is now BC Hydro’s director of policy and reporting.

“Those risks exist on any project. We disclosed them in the Business Case and at the JRP [Joint Review Panel hearings on Site C]. The key is to highlight that we have contingency to cover most items, and a project reserve to cover the rest.”

The internal e-mails also detail BC Hydro’s concerted efforts to craft messaging for any members of the media who expressed interest in following several DeSmog Canada stories about Site C, including a story about Hydro’s $175 million plan to truck at-risk bull trout upstream past the dam for 100 years when up to 40 percent of the fish are expected to perish in the dam’s turbines while migrating back downstream.

One internal Hydro document with a weekly Site C public affairs summary listed Freedom of Information requests as one of the “on-going risks” to the project. “The Project continues to get a lot of Freedom-of-Information Requests related to various issues. The FOIs can be expected to end up in the public realm, usually through media reports,” the document noted.

BC Hydro only responded to the FOI request, made last August, after a complaint was filed with the Office of the Information and Privacy Commissioner (OIPC) when the Crown Corporation missed a legal deadline for delivering the documents.

The commissioner issued a consent order, compelling BC Hydro to release the information.

Image: Premier Christy Clark, flanked by BC Hydro President Jessica McDonald and Energy and Mines Minister Bill Bennett, at a Site C contract announcement. Photo: Province of B.C. via Flickr  (CC BY-NC-ND 2.0)

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Those are the words of Harry Swain, who chaired the review of the Site C dam, in an affidavit filed in federal court this week.

The BC Hydro Ratepayers Association is challenging the decision of the federal minister of Fisheries and Oceans to issue a permit authorizing destruction of fish habitat for the Site C dam on the basis that the minister neglected to assess the justification for the project.

Indeed, the justification for the project is the key sticking point for many British Columbians concerned about the economic consequences of building the $8.8 billion dam on the Peace River.

In new polling conducted by Insights West on behalf of DeSmog Canada, 73 per cent of British Columbians support sending the Site C dam for an independent review of both costs and demand.

“Hasn’t that already happened?” you might wonder. The short answer is no, because the BC Liberals exempted the most expensive public project in B.C. history from review by the B.C. Utilities Commission.

Even so, Swain’s panel insisted the project be reviewed by the utilities commission — which exists to ensure fair rates and that shareholders in public utilities are “afforded a reasonable opportunity to earn a fair return on their invested capital.” The province ignored that recommendation.

During rate design hearings this summer, the B.C. Utilities Commission learned that BC Hydro doesn’t plan to pay off the Site C dam until 70 years after it’s built — in 2094.

And that’s a best case scenario, if BC Hydro’s load forecasts turn out to be correct — despite being persistently wrong — and if the project comes in on budget, despite a 2014 Oxford University study that analyzed 245 large dam projects and found cost overruns were, on average, 96 per cent.

Why It's Not Too Late to Stop the #SiteC Dam https://t.co/InOKWatF2l #bcpoli #cdnpoli @christyclarkbc

— DeSmog Canada (@DeSmogCanada) November 25, 2016

One mustn’t look further than the Muskrat Falls hydroelectric dam in Labrador, which is now estimated to be $4 billion over its 2012 estimated cost and is projected to lead to an increase of $150 per month for every household’s electricity bill, to see the very real risk of overestimating demand and underestimating cost.

“The project is identical to Site C in the sense that the project went ahead without proper due diligence and the business case was not adequately undertaken and in a short period of time major changes took place which resulted in a phenomenal escalation of costs,” Marc Eliesen, former CEO of BC Hydro, told DeSmog Canada.

Which brings us back to the new polling. Seven in 10 respondents support pausing construction of Site C to investigate alternatives to meet future power demand.

While Premier Christy Clark has promised to get to “the point of no return” before the next election, survey results suggest British Columbians prefer taking a more measured approach.

“We’re not too late to either cancel or suspend Site C while a full and impartial, objective review is taken,” Eliesen said. “There have been a number of major hydro developments in Canada that were subsequently cancelled.”

Previous polls by BC Hydro have indicated broad support for the dam by using a question that references “increasing power demand” — despite the fact electricity demand was the same in 2015 as it was in 2005.

The new Insights West polling indicates that if demand for more power arises in the future, nine in ten British Columbians support investing in energy efficiency measures (92 per cent) and adding more wind, solar and geothermal power to the grid as needed (also 92 per cent). Just over a third (37 per cent) support building large hydro dams.

Given that nearly $9 billion of public money is at risk here, and the power isn’t needed for at least a decade, it seems prudent to give this mega project the review it should have received in the first place. 

Emma Gilchrist is executive director of DeSmog.ca, an online magazine focused on energy and environment. You can reach her at emma@desmog.ca

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Just two years ago only four in 10 British Columbians had even heard of the Site C dam. Now, the project — one of the most expensive and environmentally destructive in B.C.’s history — is making international headlines.

With construction ramping up, the high cost of the Site C dam is becoming more visible, and not just on the landscape.

Residents are being forcibly removed from their land. More than 100 kilometres of river valley — much of it agricultural land — is slated for flooding. Independent review processes, meant to ensure the project serves the public interest, have been circumvented and indigenous rights have been trampled.

B.C. Premier Christy Clark has vowed to get the $9 billion Site C dam past the “point of no return” before the May 2017 provincial election, despite a torrent of experts questioning the demand for the power.

Aided by permits issued by the Trudeau government, construction on the project is rushing ahead, while First Nations wait on a court ruling that could stop construction.

Thanks to donations from you, our readers, DeSmog Canada was able to send celebrated photographer, Garth Lenz, to the Peace to capture the ongoing construction and the landscapes and lives that stand to be affected by the Site C dam.

While the destruction may alarm some readers, it’s worth noting that most of the work so far has been isolated to in and around the site of the proposed dam and more than 80 kilometres of river valley remains untouched at this stage.

A road winds up the north bank of the Peace River near Fort St. John, where a work camp has been constructed on the river bank. Photo: Garth Lenz.

A temporary bridge has been built across the river near the proposed dam site. Photo: Garth Lenz.

The $470 million work camp on the dam’s north bank could house up to 2,000 workers. It will feature a movie theatre, licensed lounge, running track and basketball court. Photo: Garth Lenz.

Clearing work on the north bank. Photo: Garth Lenz.

Photo: Garth Lenz.

An injunction notice at the site of the Rocky Mountain Fort, the first white settlement on mainland B.C. Protesters camped out at the site for two months last winter to stop construction, until BC Hydro won an injunction to have them removed. BC Hydro is now suing six Peace Valley residents for conspiracy, intimidation and trespass as a result of the protest camp, in what has been called a SLAPP suit. Photo: Garth Lenz.

Bridge construction on the Moberly River, which will also be flooded by the Site C dam. Photo: Garth Lenz.

Photo: Garth Lenz.

Photo: Garth Lenz.

Photo: Garth Lenz.

Photo: Garth Lenz.

Photo: Garth Lenz.

Site C dam construction looking south from the north bank of the river. Photo: Garth Lenz.

Crews attempt to repair sloughing as a result of heavy rainfall that destabilized hills along the north bank of the river. Photo: Garth Lenz.

Ken and Arlene Boon’s farm has been in the family for three generations. Like others in the 100-kilometre flood zone, the farm will effectively be destroyed by the Site C dam. Half of the farm will be under water, with the other half — including the Boons’ family home and farm buildings — sacrificed to build a new highway. BC Hydro wants to begin construction on the section of highway that will pass through the middle of the Boons’ farm as early as Christmas. Photo: Garth Lenz.

Arlene Boon picks what may be her last harvest on the land her family has farmed for three generations. Photo: Garth Lenz.

The Site C dam will impact 13,000 hectares of agricultural land, including flooding 3,800 hectares of farmland in the Agricultural Land Reserve, an area nearly twice the size of the city of Victoria. Photo: Garth Lenz.

Archaeologists dig for artifacts on the Boons’ farm. The arrowheads found here indicate a long and rich history of indigenous habitation in the area, dating back at least 12,000 years. Photo: Garth Lenz.

Ken Boon in the kitchen of the Boon family home. Ken and Arlene have been told they must vacate their land by Christmas. Photo: Garth Lenz.

All of the low-lying areas seen here are slated for imminent destruction. Photo: Garth Lenz.

A rare limestone formation called a tufa seep, which took close to 10,000 years to form and covers the hillside with clear pools, rare mosses and calcified trees. This area is destined to be bulldozed and clear-cut as soon as this winter. Photo: Garth Lenz.

Low-elevation forest in the flood zone slated for logging. Photo: Garth Lenz.

The Watson Slough, an important wetland conservation area, that will be flooded by the Site C dam. Photo: Garth Lenz.

This critical old-growth forest habitat along Moberly River is slated for destruction by the Site C dam. Photo: Garth Lenz.

The Bear Mountain Wind farm is located near Dawson Creek, B.C. With a newly installed solar hot water system at city hall and the proliferation of solar panels on the roofs of businesses, the city plans to become the renewable energy capital of B.C. The Site C review panel didn’t have the mandate to consider alternatives to the Site C dam but criticized B.C. for failing to investigate alternatives like wind, solar, run-of-river hydro and geothermal power generation. Photo: Garth Lenz.

After looking at these photos, you may be asking yourself: “So is the Site C dam ‘past the point of no return?’ “

“It’s clear even more so as each day goes by that there really is no business case for Site C, especially with Hydro’s own electricity demand decreasing significantly,” Marc Eliesen, former CEO of BC Hydro, told DeSmog Canada this summer.

Eliesen pointed to examples from other provinces where failed projects have been halted mid-way.

For instance, in the 1970s, Manitoba Hydro began to build a large dam on the Nelson River, yet after 2.5 years of construction, it became apparent that the long-term power forecasts had changed and construction was suspended.

“Can you postpone, can you suspend, can you cancel Site C? Basically the experience in other jurisdictions shows that you can if the end result shows that the cost to the ratepayer will be more than if you postpone or suspend.”

B.C. Premier Christy Clark has vowed to get the $9 billion Site C dam past the “point of no return” before the May 2017 provincial election. Here’s what that looks like.

Posted by DeSmog Canada on Tuesday, October 18, 2016

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Former BC Hydro CEO Marc Eliesen says BC Hydro’s claim that a one-year delay in Site C dam construction will add $420 million to the project’s $8.8 billion cost is “effectively illusionary” and based on “fundamentally flawed” analysis.   Eliesen made the statement in an affidavit filed February 16 in the B.C. Supreme Court, in response to BC Hydro’s application for an injunction to remove Peace Valley farmers and First Nations members from a camp they have occupied since New Year’s Eve.

The application, to be heard February 22, seeks to prohibit anyone from physically interfering with Site C work or counseling others to do the same. If the application is approved, campers who remain at the site will risk arrest.   The peaceful camp, at the Rocky Mountain Fort site on the Peace River’s south bank, has prevented clearcut logging of the surrounding old-growth forest in preparation for Site C flooding. Court documents filed by BC Hydro say the area around the fort site must be cleared immediately because it is slated for a “potentially acid-generating” waste rock dump. The documents note that a berm will be constructed to prevent waste from entering the Peace River.   In his affidavit, Eliesen, who has also headed Ontario Hydro and the Manitoba Energy Authority, says BC Hydro’s testimony in support of the injunction application “fails to provide the proper and comprehensive historical context of BC Hydro’s determinations regarding this project” and is “without merit.”

In a January 28 affidavit, Site C Commercial Manager Michael Savidant claims that a one-year delay in logging will inflate the cost of Site C construction by $420 million, an increase of $245 million over his previous statements about the cost of a one-year delay.   Savidant, who has worked for BC Hydro since 2004 and who previously worked for Enron Canada, says the revised costs of a delay include $100 million for inflation and $160 million “of increased interest costs due to future higher rates.”

Eliesen’s affidavit says that delaying Site C is likely to save B.C. ratepayers “more than BC Hydro’s alleged $420 million costs” of delay. That is due to BC Hydro’s own projections for decreasing demand for electricity, particularly among heavy users such as the pulp and paper industry. Under the circumstances, Eliesen says, proceeding with Site C right now is “highly imprudent."

In a separate affidavit addressing the injunction application, U.S. energy economist Robert McCullough testifies that a one-year delay in construction would save B.C. ratepayers $268 million, a two-year delay would save $519 million, and a five-year delay would result in net savings of $1.18 billion. McCullough says savings result from Site C power sold at a loss due to a “dramatic fall in world energy prices since 2008.”

In court documents to support its injunction application, BC Hydro claims the seven-week camp has prevented logging from taking place around the fort site and is causing damage and “irreparable harm” to the crown corporation.   The injunction application follows a civil suit against the campers launched in mid-January by BC Hydro. The suit claims damages against six of the campers, including Peace Valley farmers Ken and Arlene Boon and Helen Knott, a social worker from the Prophet River First Nation.   “BC Hydro has taken this aggressive move of intimidation in terms of suing us,” Knott said in an interview. “In the northeast region where I’m from there’s a lot of oil and gas industry. We’re not against development. This is the project where we’re saying ‘No, this is enough. It’s too much. You’re crossing the line.’”   Knott, who is currently in Toronto speaking about the Rocky Mountain Fort camp at an Amnesty International event, was served with the civil lawsuit when she was visiting Peace Valley farmer Esther Pedersen. Pedersen has been collecting food donations for the camp from local residents and businesses. A road right-of-way on her farm has also been used by helicopters that flew to the camp, including one that brought scientist David Suzuki and Grand Chief Stewart Phillip from the Union of B.C. Indian Chiefs to visit and dropped off a second survival shack for the campers.   “We’re getting letters from older ladies who are baking pies and making soups [for the camp] and shows of solidarity from across Canada,” said Knott. “It’s pretty amazing.”   The campers, who call themselves the Treaty 8 Stewards of the Land, are asking for Site C construction to be halted until five legal cases against the dam are resolved and the federal government can review Site C’s potential infringement on constitutionally-protected treaty rights.   The Union of B.C. Indian Chiefs, Amnesty International and two dozen other national and B.C. groups have asked the federal government to rescind Site C permits granted by the Harper government. The Union of B.C. Municipalities has also called for a moratorium on Site C.   Eliesen’s affidavit says Site C has not been subject to “an adequate level of due diligence” to determine if the project is needed, if energy alternatives have been adequately explored, and if the timing of construction is appropriate.   Eliesen points out that the Joint Review Panel which examined Site C for the federal and provincial governments concluded that BC Hydro had not demonstrated a need for the project and recommended it be sent to the watchdog B.C. Utilities Commission for scrutiny, which is also a request from the campers. The B.C. government has exempted Site C from the commission’s oversight.    Court documents filed by BC Hydro state that further excavation of the fort site will be conducted this spring to search for remains of historic aboriginal encampments dating from the late 1700s and early 1800s when the fort served as a provisioning centre for the fur trade industry.   Survey work by a BC Hydro contractor last summer and fall found evidence of cultural materials, including modified historical artifacts, which are “possible” indicators of aboriginal encampments, according to the documents. The documents say the B.C. government notified all Treaty 8 First Nations and other aboriginal groups about the findings on January 18, after a report on the findings was submitted to the Archaeology Branch of the Ministry of Forests, Lands and Natural Resources three days earlier (and following the first media report on the issue in a January 8 DeSmog story).   The Rocky Mountain Fort site, a designated Class 1 heritage site, is one of 40 heritage sites that would be destroyed by the Site C dam when it floods 107 kilometres of the Peace River and its tributaries. BC Hydro’s court documents claim that any delays in logging around the fort site will impact the entire project.   In the early 1990s, when Eliesen was BC Hydro’s CEO and President, BC Hydro issued a public statement on behalf of its Board of Directors, saying that Site C would not proceed due to First Nations rights, and economic, social and environmental factors.

Image: Peace River bank undergoing Site C construction. Photo: Garth Lenz.

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

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

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

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

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

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

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

Failure to Consider Columbia River Power ‘Non-Sensical’

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

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

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

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

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

Mining, LNG Companies Not Paying ‘Fair Share’

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

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

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

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

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

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

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

Site C Dam Price Tag Likely to Escalate

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

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

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

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

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

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

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

Site C Dam ‘Doesn’t Make Any Sense’

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

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

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

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

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With 2014 drawing to a close, DeSmog Canada decided to take stock of its most popular stories of the year.

Readers came in droves for our in-depth reporting on climate change, oilsands and oil pipelines, but they also loved articles about potential solutions to our climate change woes. Indeed, two of our Top 10 posts are on Canada’s geothermal potential.

Without further ado, here are DeSmog Canada’s Top 10 articles of 2014. Thanks for reading!

1. Bill 4 Passes: B.C. Parks Now Officially Open…To Pipelines and Drilling. More than 10,000 citizens wrote letters and signed petitions to try to stop the B.C. government from passing Bill 4, which allows for industry (and others) to carry out "research" in provincial parks related to pipelines, transmission lines, roads and other industrial activities that might require park land.

2. PHOTOS: Famed Photographer Alex MacLean’s New Photos of Canada’s Oilsands are Shocking. One of America’s most famed and iconic aerial photographers used his unique eye to capture some new and astounding images of one of the world’s largest industrial projects.

3. Debunked: The Top 10 Stupid Arguments in Neil Young Debate. You may recall that in January last year, Neil Young created one helluva stir with his Honour the Treaties tour. The Alberta media hyperventilated with these Top 10 stupid arguments.

4. Alberta Partners with Major Oilsands Companies to Develop Kindergarten to Grade Three Curriculum. This story created such an uproar that at least one company dropped out of curriculum development.

5. Top Five Craziest Things Climate Change Recently Did in Canada. From the mass die-off of sea scallops on the West Coast to a jump in Lyme disease because more ticks are suriving the winter, this Top 5 list attracted a lot of eyeballs.

6. Top 5 Reasons Why Geothermal is Nowhere in Canada. Canada is the only country on the Pacific Ring of Fire without any commercial geothermal power plants, despite having abundant potential and, ironically, Canadian energy companies running geothermal power plants around the world.

7. Top 10 Quotes from Canada’s Muzzled Scientists. Environics Research collected dozens of quotes from scientists who allege the Harper government is muzzling them, interfering with their research and ignoring their findings — particularly when it comes to evidence that covers issues such as climate change and other impacts of unsustainable industrial development.

8. Energy Executive Quits Trans Mountain Pipeline Review, Calls NEB Process A ‘Public Deception'. Marc Eliesen had some scathing words for the National Energy Board when he dropped out of its review of Kinder Morgan’s Trans Mountain oil tanker and pipeline project. He called the review process “fraudulent” and a “public deception” and called for the province of B.C. to undertake its own environmental assessment.

9. New Maps Reveal B.C. Has Enough Geothermal Potential to Power Entire Province. As B.C.’s politicians contemplated flooding the Peace Valley for the Site C hydroelectric dam, a new report from the Canadian Geothermal Energy Association said the province is sitting on a figurative gold mine of geothermal power with low environmental impact.

10. Only Four in 10 British Columbians Have Heard Of This $7.9B Mega Project — Have You?. The Peace River Country, which spans the Alberta-B.C. border, feels a world away to the 75 per cent of B.C.’s population that lives in the Lower Mainland or on Vancouver Island. But, as the biggest infrastructure project in the province’s history, the $8 billion Site C dam stands to impact all British Columbians — from the implications for our electricity bills to the flooding of some of our province's most valuable agricultural land.

Photo: Alex McLean. Surface oil on tailings pond at Suncor mine near Fort McMurray.

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An energy executive is weighing in on the federal review of Kinder Morgan’s Trans Mountain oil pipeline expansion with a scathing letter that calls the National Energy Board’s review process “fraudulent” and a “public deception” — and calls for the province of British Columbia to undertake its own environmental assessment.

Marc Eliesen — who has 40 years of executive experience in the energy sector, including as a board member at Suncor — writes in his letter to the National Energy Board that the process is jury-rigged with a "pre-determined outcome."

Eliesen is the former CEO of BC Hydro, former chair of Manitoba Hydro and has served as a deputy minister in seven different federal and provincial governments.

In his letter, Eliesen tells the National Energy Board (NEB) that he offered his expertise as an intervenor in good faith that his time would be well spent in evaluation Trans Mountain’s proposal.

“Unfortunately, I have come to the conclusion that the board, through its decisions, is engaged in a public deception,” Eliesen writes. “Continued involvement with this process is a waste of time and effort, and represents a disservice to the public interest because it endorses a fraudulent process.”

Eliesen writes that he was dismayed when the oral cross-examination phase was removed from the Trans Mountain hearings. He notes that oral cross-examination has served as a critical part of all previous Section 52 oil pipeline hearings.

“It is my experience that when a proponent does not face the spectre of oral cross-examination, their written responses to interrogatories suffer from a lack of detail and accountability,” Eliesen writes. “Still, I was willing to see the results of the Information Request process the board promised would be sufficient.”

When those information requests came back, however, Eliesen lost all hope in the process.

The unwillingness of Trans Mountain to address most of my questions and the board’s almost complete endorsement of Trans Mountain’s decision has exposed this process as deceptive and misleading. Proper and professional public interest due diligence has been frustrated, leading me to the conclusion that this board has a predetermined course of action to recommend approval of the project and a strong bias in favour of the proponent.

In effect, this so-called public hearing process has become a farce, and this board a truly industry captured regulator.

A regulator is considered ‘captured’ when it turns into more of a industry facilitator, rather than a regulatory watchdog.

Kinder Morgan’s Trans Mountain expansion proposal would triple the amount of oil the company ships to Burnaby and increase the number of oil tankers travelling through Vancouver Harbour and the Gulf Islands seven-fold.

National Energy Board Has 'Pre-Determined Course of Action' to Approve Trans Mountain: Eliesen

Eliesen argues that a series of National Energy Board decisions reflect a pre-determined outcome.

“They reflect a lack of respect for hearing participants, a deep erosion of the standards and practices of natural justice that previous boards have respected, and an undemocratic restriction of participation by citizens, communities, professionals and First Nations either by rejecting them outright or failing to provide adequate funding to facilitate meaningful participation,” Eliesen writes.

To illustrate this behaviour, Eliesen outlines six examples:

1) Intervenors being excluded from the formulation of the list of issues to be taken under consideration during the review. Kinder Morgan’s opinion, on the other hand, was taken into account when formulating the list.

2) The board refusing requests from intervenors — including municipal governments and First Nations — for more time to prepare information requests (due to the highly technical, voluminous nature of Trans Mountain’s application).

3) The lack of basic professional standards of disclosure, source verification, references and methodology in Trans Mountain’s studies.

“It is shocking that in a process such as this where due diligence is required on a major capital project that the board has not held Trans Mountain to a minimum professional standard of accountability and transparency,” Eliesen writes. “The Board’s veneer examination of the proponent’s case is reflective of a decision not to dig too deeply for fear the economic case may crumble, or a lack of economic, financial and business acumen on behalf of the Board to know where and how to dig.”

When basic business questions are asked by intervenors, Trans Mountain refuses to answer them, Eliesen adds.

4) The board’s axing of oral cross-examination. The Government of Canada’s Department of Justice has informed the board that evidence given without cross-examination should be rejected. The Department of Justice stated “Canada’s position is that cross-examination is necessary to ensure a proper evidentiary record …” Furthermore, “cross-examination serves a vital role in testing the value of testimonial evidence. It assists in the determination of credibility, assigning weight and overall assessment of the evidentiary record. It has been termed ‘the greatest legal invention ever invented for the discovery of truth’ … without cross-examination the board will be reviewing only untested evidence.”

5) The board's failure to compel Kinder Morgan to answer questions adequately. In the absence of oral cross-examination, the board is relying on written information requests between intervenors and the proponent. However, Trans Mountain has failed to respond in a way that addresses the core elements of most questions — and the board has failed to compel them to answer.

“They have either provided non-responses, general statements, or referred back to the inadequate information in the original application that gave rise to the question in the first place. In many instances Trans Mountain has assumed the regulator’s role declaring that the question asked is outside the List of Issues established by the NEB,” Eliesen writes.

Out of the approximately 2,000 questions not answered by Trans Mountain that intervenors called on the board to compel answers to, only five per cent were allowed by the board and 95 per cent were rejected.

6) Trans Mountain has failed to answer even the Province of British Columbia’s questions, so the province asked the NEB to compel Trans Mountain to answer. But guess what? That request was also denied by the board.

“The board has sided with Trans Mountain dismissing the Province of B.C.’s need for answers in pursuit of its duty to British Columbians,” Eliesen writes in his letter. “The NEB’s bias in support of the proponent is reflecting poorly on the Province of B.C. in that it is unable to obtain necessary answers to conduct its due diligence.”

Province of B.C. Should Cancel Equivalency Agreement, Launch Own Review of Trans Mountain

Eliesen finishes his letter by calling on the Province of B.C. to cancel the equivalency agreement with the federal government to undertake its own environmental assessment as the only meaningful way to get answers to its questions.  

Andrew Weaver, Green MLA for Oak Bay-Gordon Head, joined the call for the B.C. government to issue the 30-day notice required to cancel the equivalency agreement with the feds and launch its own, separate environmental assessment process.

“In the past week alone we have seen Kinder Morgan sue Burnaby residents for trespassing on parkland and one of the most credible intervenors, Marc Eliesen, fully withdraw from the hearing process,” Weaver says.  

The June 2010 equivalency agreement signed between the federal government and province set the review process for major pipeline and energy projects under the National Energy Board, with final approval to be determined by the federal cabinet. The equivalency agreement for the Trans Mountain project can be cancelled with 30 days notice.

“The B.C. government needs to stand up for British Columbians,” Weaver says. “What we need is a made-in-B.C. environmental assessment that is controlled by British Columbians to ensure our concerns get respected and that our questions get answered.”

Marc Eliesen Letter of Withdrawal from Kinder Morgan Trans Mountain expansion NEB process

Photo credit: Jenny Uechi, Vancouver Observer

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