Site C dam gets green light

Mega-dam presents paradox for industry, which needs the power but could see inflation on LNG projects from labour crunch

Site C dam, which could cost nearly $1 billion more than when it was reviewed by a joint review panel last year, has been given the green light.

"Building major dams like Site C will build on that proven record we have here almost uniquely in our province of delivering inexpensive power when and where we need it," said Premier Christy Clark.

Clark said alternative energy sources the province looked at before approving the hydroelectric dam would be "just as clean and just as sustainable, but none are as affordable for taxpayers and ratepayers. None is as reliable."

Construction on the dam, now estimated to cost $8.8 billion – $900 million more than the price tag used when it was reviewed by a joint environmental review panel – is expected to power up in 2024.

Asked to explain how the project's upper capital cost has ballooned by nearly $1 billion, Clark said: "I felt that we needed to really state what we thought would be the true cost of the project, including a project reserve. Now, hopefully that won't all be spent."

With a capacity of 1,100 megawatts and 5,100 gigawatts of power per year, it would produce enough electricity to power 450,000 homes.

Both the BC Chamber of Commerce and BC Business Council support the mega-project. Large hydroelectric dams have proven to be a major economic engine for industry in B.C.

Rio Tinto Alcan’s aluminum smelter in Kitimat, for example, could not have been built without access to relatively cheap power, and it is expected B.C. will need more power as new mines and liquefied natural gas plants are built.

“B.C.’s economy has been built on reliable, low-cost power – but our aging infrastructure threatens that,” said John Winter, president and CEO of the BC Chamber of Commerce. “By committing to building Site C, government is investing in B.C.’s continued access to the energy we need to take B.C. forward.

“Site C is the largest investment decision our province will make in a generation. But let’s be clear: Today’s decision was the right decision for our economy and our future."

“The Site C project will ensure that mineral development projects throughout the province will have a reliable supply of clean hydroelectric power for generations to come," said Gavin Dirom, CEO of the Association of Mineral Exploration BC.

But Site C's construction could present a paradox: It could strain B.C.'s skilled labour pool, adding inflation to the B.C. Liberal government’s other energy priority: liquefied natural gas.

At its peak, the dam’s construction would employ roughly 1,700 workers over a two-year period, and about 800 per year over a four-year period. Clark said construction will start next summer and completed in 2024.

One of the projects that could be competing with Site C for workers is a proposed new gas refinery in Chetwynd, which would use natural gas to produce gasoline.

Blue Fuel Energy’s Sundance Fuels plant would require about 2,000 workers at its peak, and the company’s president, Juergen Puetter, fears Site C could put a huge strain on B.C.'s skilled labour pool, especially if pipelines and LNG plants are being built around the same time.

“If they all go at the same time, then labour costs will go right through the roof,” Puetter said.

B.C.'s independent power sector has argued that it could meet B.C.'s increasing power needs with wind power, run-of-river and even geothermal power.

Although Site C will decrease the role that independent power producers will play in meeting B.C.'s energy needs, it's not the sector's death knell, said Paul Kariya, executive director for Clean Energy BC.

"I can't foresee an option that does not include an opportunity for the clean energy sector going forward," Kariya said.

B.C. ratepayers will not start paying for Site C until after it is built.

David Craig, executive director for Commercial Energy Consumer’s Association, said the businesses his organization represents generally supports Site C.

“The business community consumers that I’ve been talking to have been largely supportive of hydroelectric projects,” he said. “They’ve seen the value of them from the past.”

But Craig fears that, even at the new price tag of $8.8 billion, the project may not come in on budget.

“The experience that I have, having reviewed all the dam projects that Hydro has ever built, they don’t come in under budget. I can anticipate that may be more costs, as the minister (Bill Bennett) has indicated there might be.”

Despite the government green light, the dam still faces hurdles, including several legal challenges.

The Peace Valley Landowners Association has filed for a judicial review of a joint environmental review panel's decision approving the project. So have several First Nations, including four bands belonging to the Treaty 8 Tribal Association.

Site C dam’s 83-kilometre reservoir would run from Hudson’s Hope to Fort St. John, and would require the flooding of more than 5,560 hectares of land, including 3,225 hectares of agricultural land, 591 hectares of which is farmland that is in production, according to BC Hydro.

The dam’s estimated budget has gone from $3.2 billion in 2004, to $6 billion in 2006, to $7.9 billion in 2011 to $8.8 billion to date.

Rob Botterell, the lawyer representing the Peace Valley Landowners Association, said the revised numbers for Site C bolsters the association’s legal argument, which is that government regulators erred in ignoring some key findings of the joint review panel.

One of the panel’s recommendations was that the BC Utilities Commission should review the dam’s costs and revenue requirements – something the B.C. government has ruled out.

The association argues that the government has not made an economic case for Site C, something Botterell said has been reinforced by the government’s recent update to the project’s projected upper costs.

“The information that has come out since the joint review panel decision and since the issuance of the environmental assessment certificate, including the cost revisions and including the information about the alternatives, only reinforces the strength of our court case,” Botterell said.

He referred to a recent study done for the Canadian Geothermal Energy Association (CanGEA), which concluded the joint review panel made its recommendations based on out of date information on B.C.’s geothermal energy potential.