Review gives Site C clean bill of health, but warns of slides, geotechnical issues

'Unforeseen problems have arisen, and will continue to arise, requiring innovative engineering responses to contain cost increases'—E&Y

A risk assessment of the Site C dam has found little reason to believe the project will miss deadlines or run over budget, but notes slides and other geotechnical issues in the Peace River Valley could drive costs as work on the project ramps up.  

BC Hydro hired Ernst & Young and BTY Consultancy Group to carry out risk assessment of Site C—the controversial $8.8 billion hydroelectric facility under construction near Fort St. John. 

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Consultants reviewed more than 100 project documents, interviewed managers and visited the worksite as part of the review this summer. 

Overall, they gave the project a clean bill of health, saying Site C is on track to meet its budget and 2024 completion date. 

“Given Site C’s early stage in its lifecycle, our review did not find any evidence to suggest that major project milestones and financial targets will not be met,” the report’s executive summary states. “Overall, the Site C project is both clearly defined and well-planned.”

While the review is largely positive news for BC Hydro, it highlights a number of “key gaps” in management of the project—including the potential for slides along the dam’s 83-kilometre reservoir, the low Canadian dollar and the need to keep a lid on contractor costs.  

The report, released Oct. 11, includes 10 recommendations as construction on the dam’s main civil works begins. The $1.75 billion civil works contract includes some of the riskiest work on the project—including the 60-metre high earth fill dam, river diversion tunnels, spillways and the concrete foundation of the generating station. 

Hydro’s contract approach has already transferred risk “to the extent possible, over to the contractors,” the report notes. However, the assessment recommends Site C staff keep a close eye on spending by Peace River Hydro Partners, the joint venture hired to carry out the bulk of work on the dam site.

“Given that the parties contracted have not had extensive experience working together on major projects, additional oversight and reporting to ensure cost and schedule targets are met should be considered,” the report notes.  

Overall, Site C appears to have benefitted from the downturn in oil prices, which has depressed labour costs in a region that was at near-full employment when the project was approved in Dec. 2014. While the difference between the U.S. and Canadian dollars could drive up the cost of goods purchased outside Canada, the report notes Hydro has “effectively mitigated” the risk of currency fluctuations “through risk-transfer and risk sharing with the contractors.” 

Slides and shearing

Geotechnical and soil issues could pose problems for the project, including shearing along the wall of the valley and bedrock deterioration, the report found. 

Over a rainy summer in the Peace Region, opponents of the project have released aerial photos of dike-work and water retention basins carved into the north bank of the Peace. 

Whether slides of other geotechnical issues will delay Site C or blow the budget remains to be seen. 

Site C has $440 million in reserves set aside to cover the costs of unexpected geotechnical issues, according to the report. And although BC Hydro has conducted “extensive” geotechnical investigations throughout the valley, “it is impossible to understand every nuance of the sub-surface conditions of such a large site,” Ernst & Young found. 

“As a result, unforeseen problems have arisen, and will continue to arise, requiring innovative engineering responses to contain cost increases,” the report notes.  

The independent Joint Review Panel appointed to review Site C heard that landslides along the reservoir could have an impact on Site C during and after construction. BC Hydro argued that the while slides were a concern, diversion tunnels and other engineering could “sufficiently prevent a landslide-generated wave from overtopping the cofferdam during construction or the earth fill dam during operation. 

The Ernst & Young report has limitations, and is not a full, independent review. The report's disclaimer notes that researchers "relied upon information provided by their client (BC Hydro)" and "have not audited, reviewed or otherwise attempted to verify the accuracy or completeness of such information."

The public watchdog group IntegrityBC also noted that Ernst & Young is a major contributor to provincial election campaigns, donating the lion’s share to the governing B.C. Liberals. 

Site C, the third dam on the Peace River, would generate 1,100 megawatts of electricity and flood 83 kilometres of river valley, including farm land and sites sacred to area First Nations.  

reporter@dcdn.ca

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