BC Hydro lifts Site C hydro project cost estimate to C$16B

BC Hydro and Power Authority said geotechnical issues and costs related to the new coronavirus pandemic have pushed the cost of a hydroelectric project on the Peace River in British Columbia's northeastern corner to C$16 billion, 50% higher than the government-owned utility's last estimate.

Abandoning the Site C Clean Energy Project would cost approximately C$10 billion, an amount too high for British Columbia's taxpayers to bear, Premier John Horgan said at a news conference. Government-owned BC Hydro hopes to avoid rate shocks by collecting the cost overruns over the 70-year-plus lifespan of the planned 1,098-MW facility. The government last estimated the cost of Site C at C$10.7 billion in 2017. The estimated completion date for the project was pushed back by a year, to 2025.

"Cancelling Site C when it was half done would have meant laying off 4,500 workers just as we're coming out of the economic impact of the pandemic," Horgan said at a Feb. 26 news conference. "It would have left us with a [C]$10 billion debt and nothing to show for it."

An outside review of the project contained 17 recommendations that included improvements in project oversight and governance. The government said it accepted all of the recommendations. In a Feb. 26 press release the government also said that BC Hydro Board Chair Ken Peterson would be replaced by Doug Allen. As a so-called Crown corporation, British Columbia's government is the owner of BC Hydro and appoints its board members. Allen has held the top job on an interim basis at several British Columbia Crown corporations that were in difficulty, including BC Ferries and TransLink, the metro Vancouver area's public transportation system.

The bulk of the cost increase came from geotechnical concerns and COVID-19-related shutdowns and mitigation efforts. Concerns about the underpinnings of the dam's right bank were reviewed by independent geotechnical consultants who confirmed that planned fixes to the foundation will work and that the dam will meet safety standards. The consultants who prepared the review will remain with the project until the foundation enhancements are completed.

Abandoning the project, with sunk costs of at least C$10 billion, would have increased BC Hydro's rates by 26% over 10 years. The increase would come at a time when BC Hydro is trying to lure industrial users who currently generate their own power to connect to its grid.

"I believe today we've made the right decision," Horgan said. "It will keep our rates among the lowest in North America and that, of course, is what everybody wants."