To date, BC Hydro has spent $492-million and the project is far from complete.John Lehmann/The Globe and Mail
BC Hydro rejected a plan to update its information technology systems in 2008, concluding the new SAP software program would take too many resources and provide too little savings. In 2010, the Crown corporation went ahead with the switch anyway.
Today, the 2008 prophecy is fulfilled: Incomplete and overbudget, the transfer is behind schedule and the promised savings have not materialized.
"There were judgments made that cost money. They were mistakes," Energy Minister Bill Bennett, who is responsible for BC Hydro, said in an interview Wednesday.
"I apologize to the ratepayer for mistakes that were made in the past."
Adrian Dix, the NDP critic for BC Hydro, said the Crown corporation's initial assessment of the SAP migration proposal was correct.
"BC Hydro originally rejected this as a terrible idea.
"Then they implemented this terrible idea anyway, for reasons that are unexplained," he said Wednesday. "It is simply a fiasco."
A 2008 document prepared for Hydro's regulator proposed a $7-million upgrade to the corporation's financial software.
The alternative, the document explained, was to spend $40-million on SAP software, but that "would require a significant dedication of management and staff resources, thereby delaying other important BC Hydro projects."
It also said the licensing costs for the SAP software would outweigh any operational savings. "Overall, this option is not considered appropriate for BC Hydro."
By the time BC Hydro went back to the B.C. Utilities Commission for another rate review in 2010, the SAP transition was already well under way – it was too late to start a regulatory review to determine if the plan was a good one.
In addition to the financial software upgrade, BC Hydro had broadened the scope of the project to encompass five other IT systems, calling it the "One Hydro" system.
Mr. Dix said the ambitious project was shaped to avoid a regulatory review, both with the timing and the way the contracts were parcelled out in small bundles. Contracts over $20-million require a review.
In the planning documents tabled in 2010, BC Hydro said its five-year information technology and telecommunications plan would transform the system "to become simpler, more integrated, modernized and lower cost." BC Hydro also promised "strict controls and governance" that would reduce IT operating costs by 30 per cent. It expected to spend $400-million over the five years.
To date, Hydro has spent $492-million and the project is far from complete.
"I think it's fair to say this is a public scandal," Mr. Dix said. "It was supposed to be finished in 2014. It's been a huge cost to ratepayers and it's not finished, and it is not meeting its performance targets. … This plan is off the rails."
Mr. Bennett, who has fielded questions from Mr. Dix on the IT project over the past two weeks, met with Hydro's new CEO, Jessica McDonald, in his Victoria office on Wednesday to get an update on the project. He said he is confident she will get the project back on track.
"She's dealing with the issues and I don't know what else we can do but own up to the fact that there were problems and she's on top of it now and trying to fix it," Mr. Bennett said, adding that she has fired the head of the IT department and is searching for a replacement.
Justine Hunter