Premier John Horgan said Friday the province will continue building the Site C dam on the Peace River following the latest economic and geotechnical reviews of the now $16-billion project.
The NDP cabinet made the decision to continue to the project after independent experts confirmed the dam was safe. The revised cost includes a one-year delay that pushes the dam’s in-service date to 2025, which the government said was primarily due to the COVID-19 pandemic and foundation enhancements needed for the dam’s spillway and powerhouse.
Horgan said the dam is half done and cancelling it now would mean laying off 4,500 workers and a sunk cost of $10 billion. The average ratepayer would pay 26% more, or about $216 a year, to cover the debt, he said.
"I believe today we've made the right decision. Completing Site C will help power our province well into the future with clean energy as we electrify our economy. It will keep our rates among the lowest in North America," he said.
"We will not put the jobs at risk. We will not shock people's hydro bills. We want to make sure that the financial implications of this project will be felt not immediately, but over the life of the project."
Last year, the NDP government appointed Peter Milburn, a civil engineer and former deputy minister of finance, to determine if the economics of completing the project still work, given its rising costs.
According to a technical briefing based on Milburn's report, a slowdown of work resulting from the COVID-19 pandemic in 2020 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 foundations on the right bank, where critical infrastructure, including the spillway and generating station, are located.
"We're confident that the project can and should be completed safely," Horgan said.
According to technical briefs released Friday, the delays from the pandemic and the geotechnical issues account for about 50% of the anticipated increased costs of finishing the dam project.
Proposed enhancements include extending a concrete foundation deeper into bedrock. Approach channel enhancements and additional drainage will reduce the water pressures that can build up in the bedrock foundation, the province said.
The two geotechnical experts consulted by the B.C. government concluded that those enhancement "are appropriate and sound, and will make the right bank structures safe and serviceable over the long operating life of Site C."
"The design of the piles system extends the foundation to a depth where undetected weak bedding planes can’t affect the stability and long-term performance of the structure," reads the province's geotechnical review report.
Work to implement these measures could begin as early as summer 2021 and will be completed by the end of 2023. Contractor schedules are being reviewed to reflect the pandemic delays and to build the foundation enhancements, the province said.
A separate review of the main earthfill dam also concluded the dam design is safe, and that any enhancements would be "low cost and non-intrusive," such as adding more fill and rock to the surface of the downstream portion of the dam.
Instrumentation and monitoring throughout the life of the dam as a continued precaution will help ensure safety, the province said.
Both France and Hoeg have been retained to provide oversight to BC Hydro while construction of the foundation enhancements are completed.
Former BC Ferries and TransLink CEO Doug Allen has been appointed the new chair of BC Hydro’s board. He replaces Ken Peterson, who was appointed after Horgan first formed government in 2017.
“Our government has taken this situation very seriously, and with the advice of independent experts guiding us, I am confident in the path forward for Site C,” said Energy Minister Bruce Ralston.
“B.C. needs more renewable energy to electrify our economy, transition away from fossil fuels and meet our climate targets. Site C will help our province achieve these things and is currently employing about 4,500 people in good-paying jobs.”
Asked if the B.C. government might ask for a public inquiry into Site C, as was done with the Muskrat Falls project in Labrador, Ralston answered with a terse "no."
Construction on Site C began in summer 2015 under the BC Liberals at an approved cost of $8.7 billion.
That jumped to $10.7 billion in 2017 after Horgan and the NDP first chose to finish the project after a review by the BC Utilities Commission.
About $6 billion has already been spent so far, with 4,428 employed on the project in December. There were 1,112 workers at the work camp Friday.
Dam critics have been calling for the project to be halted since before it was sanctioned by the previous Liberal government under Christy Clark.
Many have said it was a mistake to green-light the project in the first place, given a demand for power in B.C. that has in recent years flat-lined, and given the falling costs of wind power.
"If there were still people in BC not outraged over the Site C project before, they should all be now," said Ken Boon, president of the Peace Valley Landowner Association.
"As in 2017, Premier Horgan assured us that everything will now be OK with the project, and it will be built safely. Those assurances that were made in 2017 turned out to be wrong, as predicted by many, so why would we believe the latest assurances?"
But were the project to be cancelled now, someone would need to pay for the $10 billion in sunk costs and remediation. The province said stopping now would have “severe impacts” to ratepayers and taxpayers, who would be better off completing the project at this stage, even with the cost increases.
If the BCUC determined that those costs should be covered by BC Hydro ratepayers, it would result in a 26% rate hike over 10 years, the Milburn report estimates.
At the new price tag of $16 billion, paying for Site C dam is expected to result in an additional premium increase of 3% over and above what was expected at $10.7 billion.
The cumulative premium rate increase was originally estimated to be 11.4% at a $10.7 billion capital cost. So, the new rate impact for BC Hydro ratepayers will now be 14.5% increase, between 2025 and 2029.
However, it will be up to the BCUC to determine how how those premium hikes will be implemented. It could be in one large single hike, or spread over a period of years.
Construction has continued at the dam throughout the review.
Both upstream and downstream cofferdams have sealed off the Peace River to build the kilometre-long earthfill dam, which will stand 60 metres high. BC Hydro says the upstream cofferdam was recently completed to its final elevation, 24 metres high above the riverbed.
Construction crews have been pouring concrete at the lower level spillway gates this month, and work continues on the new $104-million Halfway River Bridge, where all 12 bridge piers are complete and steel girders are being installed on top.
The first two turbine runners arrived at the site in January and February after arriving in B.C. from Brazil last year.
“Our members have given everything to this project this year. They have been working literally around the clock, being away from their families for prolonged periods amidst a global pandemic, tackling every challenge that has come their way," said Curtis Haugan, provincial pepresentative for CLAC, which represents employees building the main civil works portion of the project.
"To see the news come out that it will proceed as expected is validation for everything they have given to the construction – and eventual completion – of a world class dam.”
The project still faces a legal challenge by the West Moberly First Nation, scheduled to start next year. West Moberly said Friday the province has chosen to sink billions more into the project without consulting First Nations or the public.
“We are not at all convinced that this project is safe," said Chief Roland Willson.
“The court has promised us a judgment before any flooding of the Site C reservoir can begin. The trial preparation is intense and costly. It’s the last place we want to be, but we’ve never been more sure that Site C is a violation of our treaty rights. If the premier hasn’t been forced to cancel the project by the time our case is decided, the court will have the opportunity to do that for him."
Horgan said the dam was one that his government would never have started in the first place, but also noted that some of the cost overruns the project now faces are ones that no one could have anticipated.
"The COVID-19 pandemic has presented challenges and construction delays that we could never have foreseen," Horgan said.
Peace River MLAs said Site C was necessary for the province's economy and electrification plans, and accused of Horgan of playing politics with the project.
"The NDP just proved today that their delays and playing politics with the project has done nothing but created huge cost over runs," said Peace River South MLA Mike Bernier. "They neglected to put in the proper over site and have mismanaged this project from day one of taking over Government no different than every other program they have tried."
Said Peace River North MLA Dan Davies: "People are for and against this project and the most important thing is transparency. This has been lacking for four years," he said. "Premier Horgan has been playing political games with this project, and with costs now having doubled under the NDP watch – is a major source of concern for all of us."
Fort St. John Mayor Lori Ackerman said, "Now that the 'go' decision has been made, I am hopeful that the agreement can realign itself with the spirit of the community Measures Agreement that was based on the use of local contractors and local hire."
Read Peter Milburn's Report:
Read the geotechnical review from John France and Kaare Hoeg:
Scroll down to see more photos of recent winter construction.
— with files from Nelson Bennett/Business in Vancouver, The Canadian Press
Email Managing Editor Matt Preprost at email@example.com.
[Eds. note: Article updates with further comments from Premier John Horgan, Peace Valley Landowner Association, West Moberly Chief Roland Willson, CLAC, Fort St. John Mayor Lori Ackerman, Peace River MLAs Mike Bernier, Dan Davies.]