Pressing On: B.C. Government Announces Decision to Complete Construction of Site C Clean Energy Project
On December 11, 2017, the B.C. government announced its decision to complete construction of BC Hydro’s 1,100-megawatt Site C Clean Energy Project (Site C), concluding that cancelling the project mid-construction would have imposed a $4 billion burden on provincial taxpayers, comprising $2.1 billion already spent and an estimated $1.8 billion in termination and site remediation costs. The B.C. government also confirmed that the capital cost estimate for Site C has been updated to $10.7 billion from BC Hydro’s original estimate of $7.9 billion.
A copy of the B.C. government’s press release, which includes links to relevant background materials, is available here.
In moving forward with the project, the B.C. government also announced a Site C “turnaround plan” to contain project costs and secure additional project-related benefits, including:
- a new “Project Assurance Board” to provide oversight over future contract procurement and management, project deliverables, environmental matters and quality assurance;
- a new community benefits program to ensure project benefits to local communities and to increase the number of apprentices and First Nations workers working on the project; and
- a new B.C. Food Security Fund to be funded by Site C revenues and dedicated to supporting farming and agricultural innovation and productivity in the province.
In addition, the B.C. government and BC Hydro will consider the development of a new procurement stream for smaller-scale renewable electricity projects where First Nations are proponents or partners, expanding or complementing BC Hydro’s existing Standing Offer Program.
Construction of Site C, which received provincial and federal environmental approvals in October 2014, began in summer 2015. Both prior to and since the start of construction, the project has faced significant opposition from various stakeholders, including landowners and First Nations in the Peace Region, several of whom launched court challenges against Site C. The Peace Valley Landowner Association’s proceedings against the government concluded in September 2016 when the B.C. Court of Appeal affirmed the lower court’s ruling that the decision by the Minister of the Environment was reasonable. In early 2017, the federal and BC appellate courts dismissed challenges of Site C’s federal and provincial environmental assessment approvals, which had been brought by the West Moberly and Prophet River First Nations.
In August 2017, the newly-elected N.D.P. government led by Premier John Horgan requested that the British Columbia Utilities Commission (BCUC) review the impact on BC Hydro ratepayers associated with continuing, suspending or terminating the Site C project.
Reporting in November 2017, the BCUC’s key findings included that:
- the Site C project is unlikely to be completed on time or on budget, and the BC Hydro load forecast underlying the project’s construction is excessively optimistic;
- suspending and restarting the Site C project in 2024 is by far the least attractive option, adding an estimated $3.6 billion to final costs and creating significant risk due to the expiration of applicable approvals and permits;
- project termination and remediation costs would be approximately $1.8 billion, in addition to the costs of finding alternative energy sources to meet demand; and
- increasingly viable alternative energy sources such as wind, geothermal and industrial curtailment could provide similar benefits to ratepayers as the Site C project, with an equal or lower unit energy cost.
Certain of the BCUC’s findings were subsequently challenged by the B.C. government, BC Hydro and others, but the regulator did not change its main conclusions. Following the publication of the BCUC report, the B.C. government consulted with a number of additional industry participants before coming to its decision to proceed with the completion of the project.
Site C will be the third dam and hydroelectric generating station on the Peace River in northeast B.C., and following its expected in-service date of 2024 will produce about 5,100 gigawatt hours of electricity each year – enough to power the equivalent of about 450,000 homes per year. In accordance with the province’s Clean Energy Act, Site C would be the last major hydroelectric project to be undertaken by BC Hydro.