It is hardly news that BC Hydro’s proposal to construct the Site C dam in the Peace River Valley faces massive opposition among local farmers, First Nations, conservationists and outdoor enthusiasts. Recently, however, growing concerns over whether the project is even necessary, let alone fiscally viable, has given the controversy a new twist.
While proponents and adversaries of large mining and energy proposals often dance the environment versus dollars debate, pitting social and environmental concerns against arguments for economic growth, the discourse over Site C has increasingly become a dollars versus dollars one.
Even the provincial government, historically Site C’s staunchest advocate, has begun to question the wisdom of the $8-billion project. Earlier this month, Bill Bennett, B.C.’s newly minted Minister of Energy and Minister Responsible for Core Review, suggested the province needs to critically examine BC Hydro’s proposal for Site C.
The Peace Valley Environment Association is one step ahead of Bennett: earlier this month, the conservation group filed a complaint with the British Columbia Utilities Commission over BC Hydro’s bypassing of the BCUC certification process.
PVEA and allied conservation groups question both the need for Site C and BC Hydro’s financial claims backing it. Concerned about exactly how much this project could end up costing the public, PVEA is asking the BCUC to confirm that BC Hydro is required by law to obtain certification for the project.
While most public utility projects must be certified by BCUC before they can be built, when B.C. passed the Clean Energy Act in 2010, it exempted a Site C dam of a particular size from the requirement to undergo this important regulatory process.
However, the current Site C proposal has ballooned from the Site C exempted under the law. For starters, its sticker price has shot up 58 per cent from the original $5- to $6.6-billion estimate. It will take years longer to construct, which means longer before any benefits would be felt, and more time for additional delays and cost escalations to occur.
And if BC Hydro’s budgeting track record is any indication, ratepayers can expect a much larger final bill than the $8 billion currently projected. The Northwest Transmission Line (also exempt from the Commission’s review) is currently expected to cost $617 million, a whopping 53 per cent inflation over the $404-million original estimate.
BC Hydro is already mired in debt. Currently over $15 billion, its arrears have nearly doubled since 2010, when the provincial government decided to move forward with Site C, and is expected to rise to $18.85 billion by 2015. As a result, the dividends BC Hydro pays to the province will be cut almost in half.
Site C is currently undergoing an environmental assessment, an essential part of responsible development. However, while an environmental assessment examines projects for their potentially adverse environmental, social, heritage and health effects, the BCUC would assess such specific factors as load growth forecasting, energy pricing policies and resource plans.
As a Crown corporation, BC Hydro’s debt is borne by ratepayers. In light of the utility’s maxed-out debt-equity ratio, the massive capital costs it faces to upgrade aging infrastructure, recent requests to increase rates and strong indications that its current business practices are unsustainable, BCUC oversight is needed to ensure that Site C receives the kind of robust review necessary to protect ratepayers from being on the hook for an $8-billion mistake.
Finally, something we can all agree on.
Anna Johnston is Staff Counsel, West Coast Environmental Law and lawyer for the Peace Valley Environment Association