BC Hydro

Site C losses will be massive

BC Hydro’s quarterly report to December 2019 showed $4.7 billion spent on Site C with another half billion in deferred costs carried as a “regulated asset.”

Before BC Hydro admitted the dam project needed a fundamental redesign to cope with foundation problems, construction cost of Site C was expected to be about $11 billion.

I surmise a $14 billion final cost is the likely minimum, not including payments for power distribution facilities. Financed for 40 years at 3%, interest would add more than another $10 billion. Annual amortization would exceed $600 million.

Even that would be low if unstable ground results in a shortened lifespan.

BC Hydro optimistically projects 5,100 GWh of production. Since that’s higher production per MW of capacity than obtained at other BC Hydro facilities, I estimate that 4,600 GWh is a more likely number, and closer to the utility’s earlier projection.

These factors suggest about 13¢ per KWh is needed to amortize the capital cost of Site C. On top of this would be operating costs such as maintenance, insurance, water license, distribution and administration. Let’s guess those add about 3¢ per KWh for a total 16¢ unit cost.

The USA Office of Energy Efficiency and Renewable Energy says:

Wind power is cost-effective. Land-based utility-scale wind is one of the lowest-priced energy sources available today, costing 1–2 cents per kilowatt-hour…

https://www.energy.gov/eere/wind/advantages-and-challenges-wind-energy

Additional sales and distribution expenses of wind power would be comparable to hydro electricity.

This elementary analysis includes no risk contingency and attaches no monetary value to prime farmland that will be flooded, or to cultural and economic significance of lands where indigenous people have lived for millenia.

Or to the damage done by carbon emissions and loss of food security potential that current BC Environment Minister Heyman worried about when he was an environmentalist.

Sierra Club Executive Director George Heyman in 2010:

Instead of investing billions of dollars in a dam whose need is unproven, we should first spend our time and money developing a full provincial framework for future energy development before making a final decision on Site C.

The loss of a huge tract of forest would leave fewer trees to soak up carbon, while flooded farmland would reduce the province’s food security.

https://www.cbc.ca/news/canada/british-columbia/site-c-criticized-by-environmental-groups-1.882767

With domestic demand in 2020 below that of 2005, the oft-repeated lies of BC Hydro’s spin doctors about demand growth are exposed by the company’s audited sales numbers.

Site C power seems promised to natural gas producers and processors at less than 6¢ per KWh, which would result in operating losses at Site C approaching $500 million a year. Those could double if BC’s surplus power is dumped in export markets that are taking advantage of low-cost solar and wind power.

With certainty of billions to be lost by completing Site C, the obvious choice is to suspend the project immediately. It would be the least-cost option.

Award winning agrologist Wendy Holm offered this comment in an earlier In-Sights article:

With all the information now on the table the Site C Dam should be stopped and a public inquiry launched to – as the Globe and Mail suggests – examine all costs and options, including cut our losses and return the site to Mother Nature to repair.

As one Peace River rancher notes, there are works of value that will remain in the Valley because of the construction that offset our taxpayer costs. She notes:

1) In our area we gained much needed road and utility upgrades worth MILLIONS. Those that have worked on the “Make Work Get More Votes and stipends” project, had JOBS and PAID Income TAX working those jobs.

.2) We gained a second access across the Peace River via the bridge on site. This bridge could serve as access to the gas fields on the ridge above the worksite, that is part of the massive Montney Shale play below, the shale gas field that is fracking the banks apart As Chief Roland Willson said, “You can have one or the other, but not BOTH”, and the frack shake studies at and immediately surrounding the site, are proof of that.

3) There is NO NEED to put every stone back, despite the massive irreparable damage done to sacred, archaeological, historical pre and post ice age sites and finds, but the shut down and remediation work will also provide years of tax paying JOBS!

4) We will have regained much needed aggregates, that have been bought up locally and hauled in from the massive Pine Pass quarry, to build this monstrosity, that have all but depleted our region’s stocks, for building and repairing our roads here. The site could be mined for decades of these aggregates worth BILLIONS.

5) We will have 2 fully serviced pads, that will be suitable for building a subdivision, where the camp was and a small brand new town for workers who work the gas fields across the river, and/or at an alternate power generator such as wind, solar, Blue Gas co gen etc, across from the site on the South bank and ALL the powerline and transformer station infrastructure is already in place to set up an alternate power generating station “IF and WHEN BC ever needs more power!”.

6) Most buildings and equipment, including the camp, will have to be sold, whether the dam is finished or not, these assets alone must be worth a BILLION+ $$.

ALL the 5 billion has NOT been WASTED Far from it. We need to get the benefit figures down on paper and make them public, so that wasting another 10 thousand million + interest, on a project predicted to fail, doesn’t happen.

Categories: BC Hydro, Site C

15 replies »

  1. Maybe the answer for the need of, Site C, lies hidden within WAC Bennett’s deal to the south, which is in its 10th session of negotiations with Trump.
    “…. Columbia River Treaty because During the most recent round of discussions, Canada responded to a framework proposed by the United States during the previous round of negotiations in Washington D.C. and ….”

    https://engage.gov.bc.ca/columbiarivertreaty/

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    • “Due to the confidential nature of the cross-border negotiations, details of Canada’s initial proposal and of the U.S. framework cannot be made public.”

      Kind of like having a real estate agency say, “We’re negotiating with buyers to sell your house but we can’t tell you anything about what we’re asking and what they’re offering. It’s too complex. But, keep in touch and we might tell you something when it’s done. Until then, trust us.”

      Liked by 1 person

  2. If we don’t shut it down, Ma nature will; in her own sweet time AND at a cost that will make expenditures to date look like peanuts.
    C’mon Horgan, grow a set and do what’s right for the economy instead of your friends

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  3. Ralston is just another politician out of the pool of liars and cowards. To blame the previous government now and still say it’s past the the no return point with all the obvious failures we all see coming is ludicrous. The only blame will be on this government now. Horgan and his new ship of fools. It’s all in his hands now. No passing the buck back now. I would say, Sorry Horgan and Ralston blame is passed the point of no return. Not Site C. And I still pray that the constituents in MLA Mungal’s riding kick her out of office for stabbing the people of the Peace in the back. That was still one of the lowest of the low blows for a politician to do. Can’t get any lower doing that kind of shit to people. Horgan is also a hypocrite potraying his being against this dam in opposition as many were. they all make me sick. So many Politicians are such outright liars hypocrites backstabbers and cowards. Even to scared to admit failure and make a tough decision to stop very possible catasrophe and spend billions spent to get there. Holy smokes huhh.

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  4. By the time the recent bad news was finally allowed to be publicly viewed, John Horgan had already picked a delay instrument. That instrument goes by the name of Peter Milburn, former deputy minister and secretary to the treasury board. He is also currently chair of the board of directors of the British Columbia Investment Management Corporation (BCI), the entity that manages BC’s public sector pension funds, including the BC Hydro Pension Fund.

    Mr. Milburn is to set his “fresh eyes” on the current state of the Site C project and report back with his advice.

    Given Mr. Milburn’s current role in managing $170 billion of investments on behalf of the public sector, and BCI’s statement that “Our investment returns play a significant role in helping our institutional clients build a financially secure future for their beneficiaries”, he should be asked one question by Mr. Horgan.

    Would BCI consider the Site C project a good investment for a financially secure future?

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  5. The corporate sector beats government when it comes to stepping away from sunk costs. Suncor’s Voyageuer upgrader was shut down during the last economic downturn. The stats were the same as those of Site C now:

    “At one point before the last recession there was said to be some $100 billion worth of various upgrader projects on the books.

    That all ended in 2009. Suncor, for example, in January of 2009 walked away from its massive $11 billion Voyageur upgrader in Fort McMurray incurring a loss of $5 billion in sunk costs because Canada’s largest oil sands producer figured it would never generate a return. The skeleton stands on the west side of highway 63 across from the entrance to Suncor main plant.”

    https://energynow.ca/2016/10/another-alberta-ndp-expert-panel-now-going-tell-energy-sector-grow-fall-2017/

    Liked by 1 person

  6. How in gods name would Horgan explain it all, if the dam failed. I hope it never comes to that, but from the evidence put forth past and present, it sounds like a huge possibility. So why would they continue to build for that possibility. Nuts.

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  7. Hi Norm;

    I was thinking some of my old numbers might stiffen the backs of those having trouble processing the financial enormity our government and BC Hydro have dumped in our laps.

    In fiscal 2006 the total of domestic GW hrs sold was 52,440 on the back of $10,997 million in total liabilities, That works out to $209,706,330 per MW hr sold.

    By fiscal 2011 the total of GW hrs sold to domestic customers was 50,233, or about a 4% reduction in domestic demand and after the court settlement gift to California of about 5,500 GW hrs. By 2011 the BC H annual report showed a liability of $330,440,140 per MW hr sold domestically.

    Moving up to 2015 the total domestic GW hrs sold was at 51,213 and the total for liabilities per MW hr was reported at $462,480,220.

    The management and board succeeded in using 121 % more capital to meet a user demand decrease of 2.3 %.

    Since these numbers are taken from the BC H annual reports no liability provision is made for “contractual obligations” that the Auditor General said were about $60 billion in 2017.

    Now if you were grading performance I think something like X would be the grade to be given if anyone was required to give grades.

    For me the question is simple; was everyone that fiscally illiterate or was this done deliberately to steal wealth from the population of BC?

    In my lifetime I never thought I would see folks abuse the goodwill/trust of their fellow citizens to this degree.

    Keep up your good work. Cheers from Erik

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  8. Its clearly not our local politicians that have any power here, they have all been coerced by some other entity. Just look through the lists of people that were involved in the decisions leading up to this dam and you will see that very few were qualified for the decisions they made.

    Shame on all the engineers who knew how bad this project was and did nothing, they did not uphold their oath. Shame on the engineers involved that did not further investigate the global impacts of this project, they did not uphold their oath.

    Gratitude to all the employees who fought this project and lost their job as a result, you are heros and you will probably never be recognized for your integrity.

    In BC there is no, and never will be justice for the ‘Manchurian candidates’ who have sold us out. Anyone with integrity will be removed and silenced. The fact that Christy Clark is still given board positions shows that no lessons have been learned from her failings.

    Unless we demand integrity from our institutions and remove the bad apples, this situation will not improve.

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  9. Great post Norman Farrell, and as you say the loss of the land in itself would be very big in the face of the consequences of climate change. The fact that the Liberals shut out the BC Utilities Commission in order to be able to walk away from a responsible decision making process, followed by the NDP walking away from their own BCUC findings, displays arrogance and ignorance. Essentially they have said that they don’t need to consult with or even inform the public about their plans for multi billion dollar boondoggles.

    There is an excuse made for the government that says they aren’t really in control, that there are shadowing forces behind these insane decisions. It may be true, but we expect to hear about this as much as all the other transparencies that need to be given to the public and aren’t being made. This is the government of the people of BC and if it isn’t the government then we deserve to know what it is. If it has frightened our government so much that they can’t talk about it then as another commenter suggested they need to gather up their courage and they need to rely on the public.

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    • You are correct RanD that we need more answers and more transparency.

      This ‘rot’ goes right to the top and has seeped into both public and private institutions throughout BC and Canada. Just do some digging on who is in charge and on the boards of major crown and private corporations. There will definitely be people that make zero sense being there unless you trace their connections in power networks.

      Just look at Forbes, their ownership structure and their motto. Start questioning what the motives of that organization are.

      In BC the most odd person rising to power was Jessica Mcdonald. Connect the dots on how she rose to power and remains so influential and you might start to unravel who actually pulls the levers in BC and Canada.

      I won’t be holding my breath waiting for the truth to come out. Too many people (including reporters) salaries depend on this information staying secret. Casualties will continue to pile up until there is a reckoning.

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  10. Horgan won’t stop it, all he cares about is union jobs, jobs, jobs.

    This is the same mentality with the FastCats.

    It is the same mentality of the Patullo Bridge, Broadway subway, and more.

    Due diligence is not practiced in BC, it is too inconvenient for politicians. No one protects the taxpayer as it is all send, spend, spend, and to hell with the consequences.

    Personally, I have completely lost faith with our current political system, as the vulgar odor of corruption has engulfed it.

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