Bad News on Site C: Budget, Schedule at Risk

BC Hydro flagged “serious concerns” about the Site C dam’s schedule, scope and budget in a construction update released Friday.

“While we remain on schedule to achieve river diversion in 2020, there is uncertainty with the project’s schedule and in-service date,” BC Hydro CEO Chris O’Riley wrote in a letter to the B.C. Utilities Commission. “This is primarily due to our ability to restart and accelerate work that was halted due to the pandemic.”

The letter accompanied the annual report on Site C for 2019 and the quarterly report covering up to March 31, delivered together in a 116-page document.

They detail the challenges of dealing with the COVID-19 pandemic, which saw the number of people working on the site reduced by 50 per cent in March, as well as pre-existing issues already adding to delays and likely cost overruns.

The letter also said that at the end of 2019 the utility discovered an issue on the right bank of the river that will require stronger foundations under the powerhouse, spillway and core areas of the future dam. “The estimated cost and schedule impacts will be better understood once the enhancement measures are selected,” O’Riley wrote.

Bruce Ralston, minister of Energy, Mines and Petroleum Resources, told reporters he is “very concerned by these reports, particularly as they relate to cost and schedule uncertainties.”

Ralston stressed that the government inherited the project from the former BC Liberal government and would not itself have started the project. “They said they wanted to push Site C past the point of no return. Well, they did.”

The NDP government made the controversial decision to continue construction on the dam in December 2017, saying it would cost too much to cancel the project.

Ralston said the government knew the project had significant cost pressures and risks, and COVID-19 has added significantly to the challenges.

Ralston announced Peter Milburn is being appointed as a special advisor who will work with BC Hydro and the Project Assurance Board and advise the government. Milburn is a former deputy minister of finance and secretary to the Treasury Board.

The BC Liberals said that Site C was on time and on budget in 2017 when the government changed.

“Today’s announcement by the NDP speaks to a government that is incapable of taking responsibility for any of its own mistakes,” the party’s critic for BC Hydro Greg Kyllo said in an emailed statement.

“John Horgan and the NDP were handed a project that was on track to meet all of its targets and it is they who have allowed this project to fall behind,” he said. “Now the people of this province are stuck paying for yet another review because the NDP simply have no idea how to manage the most important clean energy project in B.C.”

The BC Green Party said in a press release that the government should give serious consideration to cancelling the project.

“The NDP needs to be clear about the price and make a decision before river diversion takes place and we change the flow of the Peace River forever,” said interim leader Adam Olsen. “I’m concerned that the government is saying Site C is past the point of no return, while admitting that they don’t know the current state of the project.... This leaves B.C. ratepayers at significant risk.”

Cowichan Valley MLA and leadership contestant Sonia Furstenau was quoted saying it’s dishonest to blame the cost escalations on COVID-19.

“The overall project health was red as of December 2019, due to significant cost pressures from geotechnical instability and contract disputes,” she said. “The issue of geotechnical instability has been raised by experts for years, so this risk should come as a surprise to no one.”

The third of a series of dams on the Peace River, Site C would flood an 83-kilometre-long stretch of the river to generate enough electricity to power 450,000 homes.

The budget for Site C had already grown significantly since the project was first proposed and was pegged at over $10 billion in 2017 when the NDP decided to continue construction. It was to begin power generation in 2023 and be completed by 2024.

BC Hydro’s O’Riley said the publicly-owned utility is reassessing the project’s budget and schedule and expects to be able to provide more detail later in the fall.

The plan is to ramp up work over the summer and fall, but there’s still much uncertainty about how the pandemic will progress.