Editorial: Cost uncertainty a Site C certainty

Cost overruns on BC Hydro’s recently completed Interior-to-Lower Mainland transmission line bode ill for taxpayers soon to be on the hook for the Crown energy corporation’s multibillion-dollar Site C dam project.

The final bill for the 247-kilometre transmission line, according to Hydro, will be around $743 million, $18 million higher than the original budget.

But, as NDP energy critic Adrian Dix has pointed out, a 2011 budget estimate had the project pegged at closer to $600 million.

Major infrastructure projects are notoriously hard on budget estimates, and Hydro CEO Jessica McDonald noted that the more than 550 the corporation completed between 2011 and 2015 collectively came it at $71 million under budget.

That’s admirable. But the potential for runaway costs on Site C is significant, and the rationale for investing in the megaproject remains questionable. 

Consider, for example, that three out of the four large dams in a 2013 Oxford University study of major hydroelectric projects around the world were over budget and their costs were 96% higher than estimates.

Site C, which started out at around $6.6 billion, is now closer to $9 billion.

The cost of the electricity it will produce is projected to be far higher than what will be attractive in a North American energy market awash in relatively cheap natural gas.

Meanwhile, domestic energy demand over the past decade has been dropping and deregulation in the U.S. has limited Hydro’s prospects in the export market.

The NDP’s newly unveiled PowerBC plan points out that maximizing the province’s existing hydroelectric infrastructure could eliminate the need for hugely expensive megaprojects that flood thousands of acres of productive farm and range land.

Pursuing an aggressive demand-side management program that increases incentives for using power during off-peak hours would also go a long way to increasing B.C.’s power generation efficiency, and promoting renewable energy innovation through a financially viable independent power production sector would help set the province on the road to becoming a global hub for green energy development.