BC Hydro

Site C – building a cesspool, not a reservoir

There are reasons why proponents of Site C, including utility executives and members of the former BC Liberal Government, continue to promote the project despite much evidence that it was the wrong choice three years ago and remains that today.

Read through the linked report or just consider the following extracts and measure the possibility that corruption motivated the political decision to proceed with the most expensive public project in BC history.

To ensure the project began, Liberals made sure they populated the board room and the executive suites at BC Hydro with loyal supporters. Then they sidelined BCUC, the independent body that was established to review this and other utility projects. Further, Liberals and their loyal friends ensured that Site C financial reports were either delayed or hidden and they employed spin doctors to manage their version of truth.

In other words, everything was done by Liberals to ensure that Site C was not subject to due diligence.

Even after the new government’s review process began, the utility was hiding and manipulating information. Despite the Horgan government’s expressed desire for an honest, open and transparent examination of Site C, Minister Michelle Mungall appears not to have imposed that will on the present management of BC Hydro.

This is a test of strength for the Horgan Government. They ought not to surrender.

corruption

From ScienceDirect.com:

Corruption is one of the key issues for public policies. It is one of the major impediments to the development of emerging countries and to further improve the quality of life in developed countries… The eradication of corruption is one of the key challenges that the world faces. Scholars agree that corruption might be eradicated by enhancing education and with cultural changes leading to a better government capable of producing policies tackling this issue.

Government policies can reduce corruption “increasing the benefits of being honest, increasing the probability of detection and punishment, and increasing the penalties levied on those caught […] Such measures usually require substantive law reform and the introduction of more transparency. [Research] indicates transparency in public procurement as a key practice for fighting corruption.

…corruption is particularly relevant for megaprojects because of their intrinsic characteristics. Megaprojects are projects characterized by: large investment commitment, vast complexity (especially in organizational terms), and long-lasting impact on the economy, the environment, and society…

Transparency International defines corruption as “the abuse of entrusted power for private gain”.  There are three conditions favouring corruption:

  1. Discretionary power: public officials must have the power of design or administer regulations and policies in a discretionary manner.
  2. Economic rents: the manipulation of decisions must derive some return for the decision-makers.
  3. Weak institutions: the structure of government institutions and the political processes are very important determinants of the level of corruption…

Corruption:

  • Reduces public revenue and increases spending, contributing to the fiscal deficit.
  • Increases income inequality because it allows well-positioned individuals to take advantage of government activities at the cost of the rest of population.
  • Imposes regulatory controls and inspections for market failures.
  • Distorts incentives.
  • Acts as an arbitrary tax.
  • Reduces the role of government in the enforcement of contracts and on the protection of property rights.
  • Reduces the legitimacy of the market economy and a democracy.
  • Acts as a barrier to entry in the market for small size and emerging firms.

Specific features characterize projects and make it more or less susceptible to corruption. These characteristics are:

  • Size: this is the most important feature because it is easier to hide bribes and inflated claims in large projects than in small projects.
  • Uniqueness: this makes budget costs difficult to compare and therefore it is easier to inflate.
  • Government involvement: public administrators can use their arbitrary power especially where there are insufficient controls on how government officials behave.
  • Number of contractual links: each contractual link provides an opportunity for someone to pay a bribe in exchange for the contract award.
  • Project complexity: when projects are very complex, factors like mismanagement or poor design can hide bribes and inflate claims.
  • Lack of frequency of projects: winning these projects may be critical to the survival or profitability of contractors, which provides an incentive for contractors to use bribes.
  • Work is concealed: subsequent processes cover the basic components of the work. The quality of the components can be very costly or difficult to check.
  • Culture of secrecy: even if public funds subsidize the projects, costs could be kept secret.
  • Entrenched national interests: the government selects local and national companies justifying the choice to favour national interests. These positions have often been cemented by bribery.
  • Lack of ‘due diligence’: frequent lack of due diligence on participants in construction projects allows corruption to continue.
  • The cost of integrity: in several cultures bribery and deceptive practises are often accepted as the norm: not paying these bribes means not doing the project.

In particular the procurement is critical, since corruption can be associated with:

  • Invitation: the public officials may have the power to decide which enterprises to invite to the tender.
  • Short listing/pre-qualification: limiting the number of competitors according to previous experience.
  • Technology choice: aiming to require particular characteristics for the tender.
  • Confidentiality of information: there are numerous ways for public officials holding confidential information to misuse their position…

Categories: BC Hydro, Site C

13 replies »

  1. The B.C. Liberals are interested in building political friendships more than building environmentally friendly projects supported by the taxpayer’s ATM. Until they are willing to openly admit the corruption, secrecy, deletion, hidden documents, offshore/out of province campaign donations, and environmental negligence … they will continue “the Christy Clark dream” that all the bad things under her watch just never really happened. It was all just a bad dream. They still have not woken up.
    If they were to check their baggage at the airport, they would need a second airplane to to transport “the baggage”. There was a lack of business ethics, hidden behind the smile and the odour still lingers.
    The BC Hydro, ICBC and Ministry of the Environment executives should be removed without severance packages and should be made to pay for the mess they created. Some should face the Judge and deserve fines with public humiliation.
    John Horgan and Andrew Weaver must lead by example … using the B.C. Liberals as the bad example.

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  2. I have commented before and I repeat again that the Board Directors of BC Hydro and all former Liberal Cabinet Ministers should be charged with Breach of Trust and Breach of Fiduciary Respossibilities with their mismanagement of BC Hydro. I’m sure that submissions to the Utilities Commission on BC Hydro would give any prosecuter enough ammunition to proceded with charges. I’m sure that Norm has enough too.

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  3. Don’t confuse the corruption of BC Hydro by the previous government with what we really need to move forward with decarbonization of our energy supply. Yes, these issues are interrelated, but do not supply an answer.

    Do you really believe we can generate the 35 to 70 GWH of ADDITIONAL electricity per year needed to electrify ground transportation from sun & wind alone? That’s an amount comparable to BC Hydro’s current annual production of 57,652 GWH. Electric vehicles will approximately double demand.

    “Sorry, boss. I can’t drive in to work today. The sun didn’t shine last night & my auto battery is discharged.”

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    • I wonder how you calculate that we’ll need more electricity than we presently consume in British Columbia to power a fleet of electric cars? What is the timeline?

      Because I’ve been looking at cars recently, I’m aware that the all-electric cars available for immediate purchase on the North Shore would fit in my driveway. Sales are miniscule and they’re likely to remain that way for years to come in Canada where driving distances are long.

      The advertised ranges of available cars do not reflect real world experience in the Canadian climate. A study conducted by the AAA Automotive Research Center shows electric vehicle driving range can be nearly 60 percent lower in extreme cold and 33 percent lower in extreme heat.

      I’d been thinking about a plug-in electric car until I was trapped twice in one week in gridlock after collisions on the Ironworkers Memorial Bridge. I wondered, jf it had been freezing weather and many were driving EVs, how long it would have taken to clear away cars gone dead after exhausting battery power to keep occupants warm.

      That’s not to say that EVs won’t become more popular but it is not going to happen quickly. That provides time for alternative clean power sources to evolve further, likely a mix of solar, wind and geothermal.

      It is foolishness to spend billions on Site C when it would create only a small amount of power at a price that is a multiple of current alternatives. It’s a bit like a young couple buying a 10 bedroom house today because their family might grow in the future.

      With the rate of technological change now occurring, we should not lock into old-style solutions for future needs anticipated. Look at the cost trends of solar and wind power generation over the past five to ten years and consider new improvements in the pipeline. Additionally, think of the potential for future efficiency improvements in lighting, motors and other items that use electricity.

      People who think Site C is an appropriate solution to energy needs might have invested in cathode ray tubes in the late 20th century because they correctly believed the numbers of TV sets in use was going to soar.

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      • Hi Norman,

        Here are the dates that European countries are planning to ban sales of gas & diesel automobiles, according to recent news: Netherlands by 2025, Norway before 2030, India by 2030 (partial ban), in UK and France by 2040. Paris plans to ban all but electric vehicles from the city by 2030.

        But what about North America?

        If NAFTA is trashed, as appears increasingly likely, free trade in automobile parts between US & Canada which we’ve enjoyed since 1965, will be over. Both countries will have to rebuild separate industries. Electric vehicles (EV) contain far fewer parts than those with internal-combustion engines (ICE). There probably would be a huge surge in electric vehicle manufacturing in North America, as well as already indicated in Europe. Is it possible that retail prices of EVs could fall below that of ICE vehicles? Over their life cycle, they are already competitive.

        According to StatsCan, fuel sales by province: https://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trade37c-eng.htm In BC 2016, gasoline sales were 5,770 million litres (1528 million US gallons), diesel sales 1,747 million litres (460 million US gals). To convert these to GWH:

        https://en.wikipedia.org/wiki/Gasoline_gallon_equivalent

        gives us values of 51,000 gigawatt-hours for gasoline sales, 17,500 GWH for diesel, 68,500 GWH total.

        According to BC Hydro, 2016 domestic sales of electricity were 57,300 GWH: https://www.bchydro.com/content/dam/BCHydro/customer-portal/documents/corporate/accountability-reports/financial-reports/annual-reports/bchydro-2016-17-annual-service-plan-report.pdf

        In other words, it would take MORE electricity than BC hydro presently distributes in BC to power our passenger vehicle fleet if all were electric, and if the efficiency of petrol-powered and electric powered vehicles was the same. Fortunately, EVs are about twice as energy efficient as ICEs. So approximately ~34,000 GWH MORE electricity is required to replace fossil energy for passenger vehicles. Most of this new energy will surely come from solarPE and wind generation. Still, these must be assurance of supply for this transition to occur. That means we must increase our stored hydro capacity.

        Lots of stored hydro is already behind WAC Bennett dam: https://en.wikipedia.org/wiki/Gasoline_gallon_equivalent Assuming it holds >2 years of water flow, Williston Reservoir holds >26,200 GWH. The rate of discharge of this energy is limited by the fact that dinosaur lake only holds 2 days of river flow; more discharge will cause downstream flooding. With Site C, the reservoir holds ~22 days of river flow. This permits rapid discharge of the upper reservoirs on time scales of minutes to months, if extra generation capacity is added as needed.

        It’s really hard to produce this kind of power flexibility any other way. That’s why I believe SiteC is essential for replacement of fossil energy by solar+wind+hydro, while still ensuring the security of supply we have enjoyed with fossil fuels.

        Sincerely, Chris Aikman http://dreamgreen.ca/

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        • Your calculations are flawed according to the European Environment Agency. They did a detailed examination of the potential impact of EVs and reported this:

          “Additional electricity generation will be required in the European Union to meet the extra energy demand arising from an 80% share of electric vehicles in 2050. The share of Europe’s total electricity consumption from electric vehicles will increase from approximately 0.03% in 2014 to around 4-5% by 2030 and 9.5% by 2050.

          “The additional electricity demand due to the high rates of electric vehicle ownership assumed for the future will need to be met by additional power generation. Furthermore, this additional energy needs to be integrated into the grid infrastructure across Europe. Critical questions are therefore how much electricity is needed, what type of generation is used to cover this additional electricity demand and how are charging peaks managed?

          “Until 2030, the additional energy demand by electric vehicles will be limited and will not significantly influence the electricity system. But, in the longer term, with high market shares of electric vehicles assumed in 2050, the required electricity demand will have more significant impact on power systems in Europe.

          “The share of electricity consumption required by an 80% share of electric vehicles in 2050 will vary between 3% and 25% of total electricity demand across the EU-28 Member States (Figure 1), depending upon the number of electric vehicles anticipated in each country…”

          The fact remains that Site C is intended to have 1,100 MW capacity and, if it performs according to BC Hydro facility averages, it would produce about 4,500 GWh of electricity or roughly 10% of BC Hydro’s current production. At $10 bn to $12 bn capital cost, it is very expensive power, about 4 to 5 times current market values. With increased production by IPPs and flat demand for the 13th consecutive year, we have a growing surplus so it is bad policy to create even more surplus electricity on the basis of something that might happen 20 or 30 years from now. In addition, this Peace River project imposes large cultural and environmental damages.

          The potential for solar power in western Canada is huge and cost effective generating technology is available now. In addition, the prospect of huge efficiency improvements is very high. We also have great potential for geothermal power, the development of which was sidetracked when the Campbell Government chose to put private hydro power producers on easy street.

          Large mistakes were made in the past. Now we need to go forward with financial prudence guiding us.

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  4. “Size: this is the most important feature because it is easier to hide bribes and inflated claims in large projects than in small projects.”

    And what did the BC Liberals know about size? The Port Mann bridge is “currently the second longest cable-stayed bridge in North America and was the widest bridge in the world until the opening of the new Bay Bridge in California.” (Wiki)

    As well, Site C: “the largest public infrastructure project in the province’s history.” These words must make contractors drool. So many ways to go cost plus + — with taxpayers paying the bills.

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    • I heard from one of the contractors that Hydro’s specs are wide enough to drive a truck through. He, of course, is an ardent Site C supporter so further discussion was fruitless. However, an unbiased examination might yield interesting results.

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  5. Stack the deck and maufacture the consent.?
    Off the books communications,post it notes ,triple delete?

    Only auditor general should be legally allowed to comment on final time and cost puffery boasting
    Not party party poli propa press pieces and cut copy paste media releases.?

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  6. I agree with you Mr. Flynn. Nothing but those charges “as a start!” should be accepted by BC taxpayers. But, let’s not narrow the scope so…it must also include Gordon Campbell and Christy Clark, as well as the ministers of environment and finance throughout the reign of BOTH premiers. If nothing else, it may help to serve as a warning for future troughers that the taxpayers have had enough of their crap, and there will be consequences for their inability to be honest, forthright and worthy of their so-called titles.
    Mr. Horgan; Mr. Weaver: Enough is Enough. Clean up this cesspool known as British Columbia.

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  7. My dictionary defines a mastermind as someone who plans and directs an ingenious and complex scheme or enterprise. It also defines a puppet as a person, party, or state under the control of another person, group, or power.

    Setting the table as outlined in Norm’s third paragraph would require considerable forethought and planning. Whether it would require true mastermind status might be open to question, but it would require considerably more intellect than shown by any of the elected BC Liberals. Even the old proverb about two heads being better than one wouldn’t explain it. I doubt six of those elected heads working together could conceive and pull it off without external direction.

    The BCUC wasn’t only sidelined for Site C; it was also kicked out of the room by the Clean Energy Act in order that other private milking machines like the Northwest Transmission Line and IPPs could nurse on the public teat with some degree of privacy.

    Given the recent revelations that BC’s Climate Leadership Plan was crafted by the oil and gas industry in the Calgary boardrooms of the Canadian Association of Petroleum Producers, we might ask whether a similar model was used to mastermind BC’s energy policies, including the Clean Energy Act. https://www.desmog.ca/2017/09/17/b-c-s-last-climate-leadership-plan-was-written-big-oil-s-boardroom-literally

    We might also ask whether puppets have pockets.

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