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Full-steam ahead on Site-C dam project

Despite financial storm clouds, critics and an extra year of delay, B.C. remains committed to giant dam project on the Peace River
A Site-C excavator sources material for the Lynx Creek section. | BC Hydro

The B.C. government will finish building Site C dam, despite new estimates that now put the cost of completing the dam at $16 billion.

The dam will also be one year behind schedule in completion and commissioning.

The impact for BC Hydro ratepayers of the new price tag is estimated to be an additional 3 per cent rate hike -- about $36 per year for the average BC Hydro residential customer.

But cancelling the project now would be an even worse deal for taxpayers, the government concluded.

"We're confident that the project can and should be completed safely," Premier John Horgan said February 26.

He added that the project was one that his government would never have started in the first place, but said "we need to stay the course, get this project completed and continue to be world leaders when it comes to green energy."

A report by former B.C. bureaucrat Peter Milburn concludes cancelling the project would result in a $10 billion write-off, which would have to be borne by taxpayers or ratepayers, and would potentially result in credit rating downgrades for both BC Hydro and the B.C. government, affecting borrowing costs for both.

The decision to complete the dam on the Peace River was announced following the release of the findings of two reports.

One was from Milburn, who was asked to review the project's finances and budget, after BC Hydro informed the BC Utilities Commission (BCUC) that the project now faced new cost pressures and delays.

Milburn's report was itself delayed by several months. It had been completed in October, but Horgan's decision to call a snap election meant it could not be considered during the interregnum. And it was delayed further still after Horgan decided to call for another report -- a technical review of proposed engineering fixes to address geotechnical issues.

According to a technical briefing based on Milbrun's report, which has not been released in full to the public, a slowdown of work resulting from the COVID-19 pandemic was partly to blame for putting the project behind schedule. But geotechnical issues on the right bank were also identified that are expected to drive up engineering costs.

The Horgan government tapped two dam geotechnical experts to look at safety issues. The government wanted to know if the dam might pose safety risks, as a result of the geotechnical issues, should it be completed.

Those experts – John France and Kaare Hoeg -- concluded the dam will be safe and reliable. But there will be additional costs to shore up the right bank, where critical infrastructure, including the spillway and generating station, are located.

According to technical briefs released, the delays from the pandemic and the geotechnical issues account for about 50 per cent of the anticipated increased costs of finishing the dam project.

To date, roughly $6 billion has been spent on the Site C dam project, which is more than 50 per cent built. Construction activities to date include the diversion of the Peace River. Horgan said cancelling the project now would result in the layoff of 4,500 workers and "a $10 billion debt and nothing to show for it."