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Government questions BCUC on Site C report

Should children not yet born help pay for the $4 billion spent on a hydro-electric dam that was never built? If the answer is no, should current BC Hydro ratepayers cover the sunk costs of a cancelled Site C dam project through a 10% rate hike, or sh
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By the end of this year, $2.1 billion will have been spent on the Site C dam.

Should children not yet born help pay for the $4 billion spent on a hydro-electric dam that was never built?

If the answer is no, should current BC Hydro ratepayers cover the sunk costs of a cancelled Site C dam project through a 10% rate hike, or should the write-off be covered by taxpayers?

These are some of the questions the B.C. government’s ministries of Finance and Energy, Mines and Petroleum Resources have put to the BC Utilities Commission (BCUC).

In a final report released earlier this month, the BCUC concluded that the worst and most costly option for Site C dam would be mothballing it and restarting it later. It concluded the dam could likely cost $10 billion to complete – which would be $1.7 billion over budget. Cancelling it would mean a $4 billion write-off. After acknowledging that the BCUC was given an extraordinarily short timeframe in which to review the project, deputy ministers ask for clarification on several key points.

One is whether the BCUC, when calculating the cost of alternative energy portfolios, included the sunk costs of cancelling Site C. Those alternative energy portfolios include a mix of new wind farms and conservation measures, like time of use pricing (i.e. charging users more during peak times) and industrial curtailment. Should the dam be cancelled, $2.1 billion will already have been spent, and another $1.8 billion would have to be spent on contract termination fees and site remediation.

“Our review of the commission report suggests that the alternative portfolio does not include termination costs,” the letter to the BCUC states. If the sunk costs were not included, it asks the BCUC to provide a calculation of how much alternative energy portfolios will cost if they are included.

The most important question for ratepayers, however, is who would cover the $4 billion cost of cancelling Site C: Them or their children and grandchildren.

BC Hydro planned to spread the cost of Site C ($8.3 billion, if built on budget) over 70 years.

The notion there is that, since a hydroelectric dam typically can produce power for 50 to 100 years, future generations who benefit from that power should help pay for it. That same principle would be harder to justify is the project is cancelled.

Nelson Bennett/Business in Vancouver