September 20, 2017 5:11 pm
Updated: September 23, 2017 4:44 pm

More questions than answers in Utilities Commission’s preliminary Site C report

WATCH: NDP government sends Site C for review

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The BC Utilities Commission (BCUC) has released a hotly-anticipated preliminary report into the future of the controversial $8.3-billion Site C dam project.

But after all of the waiting, the report raises more questions than it answers, saying it does not have enough information in key areas and refusing to offer a recommendation on whether the project should proceed.

LISTEN: Dissecting the BC Utilities Commission Report on Site C with Vancouver Sun columnist Vaughn Palmer

What we know

While the report highlights multiple areas where it is premature to offer answers, it does assert a few concrete findings.

The commission found that, as of June 30, the project is currently on track for its scheduled completion date in 2024.

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It also agreed with BC Hydro’s assessment that if the project is scrapped, it will cost the province about $3.2 billion — $2.1 billion in sunk construction costs, and $1.1 billion to wind down the project.

It noted that if the project was cancelled, there would also be other costs associated with finding alternative sources of power.

It also disagreed with BC Hydro’s assertion that biomass, geothermal, and battery storage were unsuitable candidates for alternative power sources, and said they should be considered as an option.

Unanswered questions

However, areas where the report said it doesn’t have information to offer answers far outnumber those where it does.

Chief among those is whether the project is actually currently on budget.

The BCUC said it is concerned that just two years into an eight-year project, Site C has already burned through 45 per cent of its $794 million contingency budget.

Moreover, it pointed to an earlier report commissioned from Deloitte LLP which identified scenarios where the project could end up as much as 50 per cent over budget.

It found that BC Hydro underestimated the cost of one of its three major contracts, and that if the case is similar for the other two it could affect the total cost.

It also pointed to the key milestone of diverting the Peace River by 2019, saying that if that doesn’t occur on time, it would put the project over budget.

Similarly, the commission said it does not have enough information on hand to say what the total cost to the province would be of suspending and restarting the project.

And in another key area where it was asked to report findings, the commission found it was lacking information to say what the cost to BC Hydro ratepayers would be under the three proposed scenarios: continuing the project, putting it on pause, or cancelling it.

On both the questions of future demand for power and potential sale of surplus power, the commission also said it was premature to make an assessment.

The commission said it needs more information from BC Hydro regarding models of a future both with and without major LNG projects.

It did, however, note that BC Hydro has historically overestimated demand, particularly from the industrial sector.

Finally, the report issued lengthy and detailed list of issues related to alternative power sources that it wanted clearer answers from BC Hydro on.

The panel has asked for responses from BC Hydro and the public by October 1.

It also said it will hold community input sessions across B.C. in the coming weeks.

LISTEN: Global BC legislative bureau chief Kieth Baldrey talks Site C with Steele & Drex

Last month, the new NDP government sent the project to the BCUC for review, with a Sept. 20 deadline for a preliminary report, and a final report due by Nov. 1.

The mandate letter issued to Energy Minister Michelle Mungall on her appointment to the portfolio in August directed that the review focus “on the question of economic viability and consequences to British Columbians in the context of the current supply and demand conditions prevailing in the B.C. market.”

READ MORE: Does B.C. really need the Site C dam?

Mungal further said last month that the commission has been asked to confirm whether BC Hydro is on target to complete Site C on budget and by 2024, and to provide advice on whether to proceed, suspend or terminate it.

WATCH: Delaying Site C dam in B.C. could cost $600M: Clark

In its submission to the BCUC, BC Hydro has claimed that killing the project would cost $7.3 billion, nearly as much as finishing it.

It arrived at that calculation by arguing $2.1 billion will have been spent on the project by year’s end, and estimating another $1.1 billion in costs for winding construction down.

It added another $4 billion in costs based on what it estimated as higher power costs for B.C. over the next 70 years.

READ MORE: BC NDP refers $8.8B Site C dam project to BC Utilities Commission

However, a separate report commissioned by the Peace Valley Landowner Association has disputed that estimate, arguing scrapping the project would actually save B.C. $1.6 billion.

Another report released this month by Deloitte LLP and commissioned by the BCUC found that canceling the project would be cheaper than putting it on hold, and that project delays could end up pushing the final tab as high as $12.5 billion.

WATCH: First Nations communities protest Site C dam

During this year’s election campaign, the NDP pledged to send the project to the BCUC, a practice that was once standard, before the previous Liberal government’s clean energy laws allowed some major projects to bypass the regulatory agency.

Construction on the dam is now two years underway, and the project employs more than 2,200 people in the province’s northeast.

Site C would be the third dam on the Peace River, and would flood an 83 kilometre stretch of valley.

Landowners, First Nations, and environmentalists have strongly opposed its construction.

-With files from Liza Yuzda and the Canadian Press

© 2017 Global News, a division of Corus Entertainment Inc.

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