Tab for Site C dam could hit $6.6 billion


The construction cost for the controversial Site C dam project on the Peace River has increased by $3 billion since 2005 and could reach $6.6 billion, BC Hydro reported on Tuesday.


The construction cost for the controversial Site C dam project on the Peace River has increased by $3 billion since 2005 and could reach $6.6 billion, BC Hydro reported on Tuesday.

Hydro cautioned in a new report that final costs for Site C, which have been creeping up with each updated study of the proposed 900 megawatt facility, won't actually be known until a final bid is accepted "just prior to construction."

"As a decision on whether to proceed to build Site C is still a few years away, any project cost estimates right now are only interim."

BC Hydro president and CEO Bob Elton said in an interview no final decision on the project has been reached, nor full-scale engineering studies commissioned.

"I think it's fair to say that, as with previous estimates that have been published, we haven't done all the engineering work you'd need to do. One of the things we need to do in the next while is get a much clearer view of what the costs would be."

Elton said the longevity of hydroelectric facilities tends to make them good investments over time.

"When you look at large hydro projects they typically have what looks to be a large up-front investment but then they have low operating costs and they have very long term benefits.

"If you went back in time to when the previous large hydro projects were built you'd see what at the time were very large capital sums -- and you'd agree I think now that those turned out to be very wise investments."

Elton noted that the project conforms to the B.C. government's instruction to Hydro to concentrate on development of electricity resources that don't increase greenhouse gas emissions.

"There obviously are environmental impacts from large hydro projects but there are also environmental impacts from every other alternative.

"When you look at the [B.C. government's] energy plan, look at the requirement for 90 per cent [generation] from clean sources, this clearly we believe falls within that and seems very consistent."

Elton said that the next step in deliberations about Site C is an extended period of public consultation which he expects will take all of 2008 to complete.

The dam would be the third of three on the Peace River, which also accommodates the W.A.C. Bennett and Peace Canyon dams.

Hydro says it would take more than a decade to bring Site C onto the B.C. electricity grid. It would have a 100-year lifespan and generate electricity at comparatively low costs.

The project would annually produce enough electricity to power 460,000 homes and is envisioned as a highly dependable and flexible addition to Hydro's roster of hydroelectric facilities.

The project is opposed by many environmental groups and many northeast British Columbia residents because it would create a new reservoir flooding an area of the Peace Valley 15 times as large as Stanley Park.

Energy lawyer and Hydro analyst David Austin wasn't surprised by the scale of the projected increase in the cost of the project -- he's been challenging Hydro for several years to provide an accurate estimate.

Two years ago when Hydro suggested Site C would cost $3.2 billion, Austin accused Hydro of low-balling the project.

"I'd say we're starting to get closer to the real truth about the actual cost of Site C. The probability of it increasing is much greater than of decreasing," Austin said in an interview.

Austin added that it may cost Hydro "hundreds of millions of dollars" in detailed engineering studies to arrive at a final estimate -- with no guarantee that the price will be acceptable.

"Now that a more accurate figure is out there perhaps the real debate over the desirability of Site C can begin.

"The in-service day of Site C is still a long way away but you have to have a fairly accurate cost number before you invest the hundreds of millions of dollars required just to move the project forward."

Jim Quail, executive director of the B.C. Public Interest Advocacy Centre, said the cost of construction for all forms of electricity generation is rising quickly, so there may be no less-expensive options available.

Quail said he hasn't received any instruction from his client groups, including old age pensioners, as to whether they support or oppose Site C.

But he said the Centre has just entered into consultations with Hydro on the question of affordability of electricity, given the expectations of his group and from industry that Hydro customers face a series of significant annual increases in electricity rates over the next several years.

He said it's not clear if Hydro or the BCUC would actually have the authority to set rates that are conditional on the financial circumstances of Hydro's customers -- notably those with low incomes.

Ultimately, Quail said, it's probably going to require a decision by the provincial government -- which will be going into a provincial election in May 2009.


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