The B.C. cabinet is about to slam into its self-imposed deadline for a decision on the fate of the Site C dam, and there are still significant unanswered questions about the impact of finishing or killing the project.
Premier John Horgan has repeatedly said the future of the Site C dam will depend on the impact that either choice – stop or go – would have on ratepayers. But last week, he expanded the list of criteria for the dam decision: "We want to make sure that the province's fiscal plan is not adversely impacted," he told the legislature. "We want to meet our climate objectives. We want to ensure that our agricultural policies can be implemented and that our requirement for energy and capacity is actually consistent … and ensure that Indigenous peoples' rights and title has not been adversely affected."
His Ministers of Energy and Finance are expected to bring to cabinet this week their best answers on the issues of Hydro rates, and the many alternatives on the fiscal question. The Crown corporation responsible for construction, BC Hydro, still needs to explain if it has addressed geotechnical problems that have already led to delays and cost overruns. And the Auditor-General may have some input on the appropriate way to handle debt if the project, already $2-billion into construction, is scrapped.
Keeping electricity rates affordable was a big part of the NDP platform, but depending on which expert is consulted, it seems inevitable that rates are going to climb whether cabinet says yes or no to Site C.
BC Hydro, in defending its project, says that to cancel Site C now would lead to 12-per-cent rate hikes because the debt would have to be repaid over 10 years. Hydro says the cost to ratepayers of completing the dam – now pegged at $10-billion – would be minimal. Critics say the Crown corporation is low-balling the cost of Site C and that alternative energy sources will be cheaper for ratepayers in the future.
Michelle Mungall, the Energy Minister, is in charge of challenging BC Hydro's claims about the impact on ratepayers. "We are doing our own analysis internally within the ministry to determine if that is indeed correct," Ms. Mungall said in an interview.
Finance Minister Carole James has one of the most complicated knots to untie.
If the project goes ahead, what will it do to BC Hydro's debt, which bond rating agencies have already flagged as dangerously high? That will depend, in part, on the final price tag, which the B.C. Utilities Commission says could exceed $12-billion.
Trickier still is what happens if the project is cancelled. The BCUC estimates the cost of unwinding the project would be close to $4-billion. That could go into one of Hydro's many deferral accounts, meaning consumers in the future will pay for a service they never get. Or, the province could book the loss to the provincial direct debt, which leaves less fiscal room for the province to build new capital projects such as schools and hospitals.
This week, BC Hydro's construction plans at Site C include the installation of geotechnical instrumentation. It sounds innocuous, but technical challenges on the slopes of the Site C dam construction site could tip the balance against completing the megaproject.
Most of the construction delays and cost overruns to date have been blamed on geotechnical challenges – specifically, two tension cracks that have developed on the north side of the riverbank where the dam is being built. The Premier says he has been assured Hydro's engineers had anticipated those problems all along, but he has asked for more details.
The NDP government came to power promising to review the Site C dam. The New Democrats were already well aware of concerns about the loss of agricultural land and the adverse impact on Indigenous rights and title as a result of the dam's construction. If there is one new thing the cabinet is now confronting, it is the role the dam could play in decarbonizing B.C.'s economy.
Late last week, cabinet brought in six experts to offer their predictions for the province's energy future. The three-hour briefing touched on whether the massive hydroelectric dam would be the best way to generate electricity, but also on forecasts for the opportunity – in fact, the demand – to replace the province's fossil fuel dependence with clean electric energy.
Mr. Horgan has discovered that the number of factors that now must be accounted for in this month's decision are growing. The cabinet must forecast B.C.'s energy future for the next generation and beyond. The one thing he could say last week with certainty: "I think that there are enormous challenges ahead."