In the end, it wasn’t a tough decision at all.
In announcing his government’s choice to go ahead with the troubled Site C dam project at a new cost of $16-billion – more than twice the original estimate – B.C. Premier John Horgan was armed with 10 billion reasons why cancelling wasn’t an option.
The cost to write off the project and remediate the site, as well as financial outlays that would have been attached to contract terminations, was going to be $10-billion. And that was not a debt that could be pushed down the road to be fretted about another day.
Almost assuredly, BC Hydro ratepayers would have borne the brunt of that task. According to a technical analysis provided by government bureaucrats, hydro rates for consumers would have increased by as much as 26 per cent over 10 years – or $216 a year per household.
A write-off would have likely impacted the province’s sterling Triple-A credit rating, and the attractive borrowing rates that this status confers on governments who earn it. Instead, by going ahead, the cost will be amortized over the 70-year life of the dam. Rate increases will be much less, and won’t begin until the dam is in service – now expected to be 2025, a delay of one year.
The province is likely to continue enjoying some of the lowest electricity rates in North America for decades to come.
Mr. Horgan’s government was persuaded by engineering experts that the geotechnical issues that have plagued the project almost from the start are solvable. The dam can be built and operated safely. And there is also this fact that made the government’s decision ultimately an easy one: The project is more than 50-per-cent complete.
“Cancelling it would cause people’s electricity rates to skyrocket and we will not burden people with additional financial stress during these difficult times with nothing to show for it,” the Premier said on Friday.
This move will likely do little to quell the dissent from a formidable army of critics who have been against this dam from the beginning. Their opposition is based on an array of reasons including the damage it was going to cause to the environment and the lack of a business case for the electricity it will provide. These same critics have also sounded alarms around the secrecy that has enveloped several aspects of the project, especially its geotechnical issues.
Site C was pushed ahead in 2014 by then-premier Christy Clark, who was looking for a legacy project. It was opposed by the NDP, the Green Party and a number of energy experts who said it was a bad idea. Yet when the NDP took power in 2017 and had a chance to kill it, it didn’t, saying to do so at that point would mean a $4-billion write-off. If it wasn’t going to stop the project over $4-billion, it surely wasn’t going to stop it over $10-billion.
In releasing its decision on Friday, the government also announced a suite of other moves, including changes at the board level of BC Hydro, which is overseeing construction. In addition, there are a number of other initiatives designed to strengthen oversight of the operation. The fact that the NDP is still working on issues as fundamental as management of the project four years after giving it the go-ahead is concerning.
So is the fact that no one could say during a technical briefing how much in contingency funding has been set aside in the event of further problems. And engineers have not ruled out the possibility. “… the most substantive geotechnical risk identified is the potential instability of the earth-fill dam,” says one report released in conjunction with the government’s decision.
In other words, there is a reason that the Premier didn’t go out of his way to guarantee British Columbians that the latest $16-billion price tag is one they can take to the bank. What he did make clear is that people shouldn’t be worried today about having to shell out extra money for mistakes that have led to the head-spinning increase in the cost of this dam.
“This is not a project for next week or next month or next year,” Mr. Horgan said. “It’s a project for the next 100 years.”
And that’s about how long it’s going to take to pay for it, too.
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