Rush review on Site C digs up a myriad of mysteries

The B.C. Utilities Commission barely made the cabinet-imposed deadline for a preliminary report on Site C this week, posting the findings just four hours before the clock ran out at midnight Wednesday.

VICTORIA — The B.C. Utilities Commission barely made the cabinet-imposed deadline for a preliminary report on Site C this week, posting the findings just four hours before the clock ran out at midnight Wednesday.

The New Democrats, in haste, had given the commission six weeks to produce a first take on financial and other concerns about the B.C. Liberal-launched multibillion-dollar hydroelectric project.

Confined to that tight time frame, the independent commission came back with a report that raised more questions than it answered.

Moreover, the 37 findings spread over the 200 pages of the report came with this caveat from the four commissioners on the review panel: “Readers are cautioned these are preliminary and subject to change as we complete the consultation process and as additional information becomes available.”

A good example of the equivocations involved whether the B.C. Hydro project is on time.

On the other: “The panel is unable to determine whether the project will remain on schedule for completion by November 2024.”

As for on-budget, the commissioners were “unable to determine whether the project is currently on budget. … The panel does not have sufficient information to assess the total possible budget overruns.”

The panel discounted evidence of overruns on large power projects in other jurisdictions as not necessarily applying to the situation in B.C.

Neither was it persuaded by Hydro’s evidence of mostly hitting the mark on capital projects here in B.C. because “Site C is so much larger than any other project B.C. Hydro has managed in its recent history.”

Hence the questions, some 73 of them, seeking more information and-or better analysis from the giant government-owned utility. The commission, which is supposed to deliver a final report to cabinet by Nov. 1, gave Hydro just two weeks to answer them all.

The two-to-one ratio between questions and answers underscored the rush job nature of the NDP-ordered review. But all those demands for further information from Hydro also helps explain why the Liberals exempted Site C from review by the utilities commission in the first place.

If the BCUC could poke that many holes in Hydro’s rationale in just six weeks, imagine the result if Site C had been subjected to a proper review by the independent commission.

A full-blown BCUC review of a project this size could readily consume two years of analysis by commission staff, scrutiny of all claims by registered interveners, and public hearings where Hydro executives would face rigorous cross examination.

Still, for all the current limitations, the commission panel did seem to be closing in on some key points.

On the cabinet request for an estimate of the cost of suspending the project for up to seven years, the panel reckoned the mothballing at $1.1 billion. Yet to be resolved is the cost of restarting Site C after that duration. Hydro estimated up to $1.7 billion.

Deloitte LLP, brought in to vet the utility’s numbers, figures the restart could be done for no more than $200 million.

Either way, it would cost less to kill the project outright and restore the site to a semblance of its pre-construction state.

“The panel finds the total cost for termination and remediation to be $1.1 billion.”

With NDP acquiescence, Hydro is continuing to work flat out on construction. Presuming termination at or near the end of the year, the sunk costs would be in the range of $2.1 billion.

On those assumptions, the combined cost of the termination scenario would be in excess of $3 billion, leaving Hydro with nothing to show for it but another great whack of debt on books heavily laden with billions in borrowing under the Liberals.

Hydro would then have to start from scratch to develop alternative sources of power that were as free of greenhouse gas emissions, reliable and competitively priced.

The commissioners took a dim view of the work Hydro has produced to date on costing the alternatives. They faulted the utility doing “apples to oranges” comparisons that effectively stacked the deck in favour of Site C.

“The panel finds that geothermal, biomass, solar and battery storage may be viable and requests that B.C. Hydro rerun its analysis with these alternatives included,” wrote the commissioners at one point.

They were also impressed by the reasonableness of the analysis cited by the Wind Energy Association. Not faring as well was natural gas-fired generation, because of concerns about emissions.

As for B.C. taking back its share of the downstream electricity generated under the Columbian River Treaty, the commission had to acknowledge the Americans seem bent on scaling down that entitlement during the next 10 years.

Some of those findings will be challenged by Hydro, others by the members of the public registering to speak at sessions starting Saturday in Vancouver. (There’s a five-minute limit on speeches, so they are advised to get to the point quickly.)

On a first read through the report, I was struck by the inherent uncertainties in forecasting electricity demand and supply, prices and markets over the decades ahead.

For all their efforts, I doubt the commissioners can do more in the remaining weeks than craft a plausible range of forecasts for the cabinet, leaving the politicians to decide what will ultimately be one very big political decision.