“Curiouser and curiouser!” Cried Alice.
Alice’s creator, English writer Lewis Carroll, penned the title words in 1865. Carroll, born Charles Dodgson, was an Oxford trained mathematician. Were he a 21st century resident of British Columbia, Carroll might be using that phrase about BC Hydro deals with SNC-Lavalin.
Particularly the deal involving the John Hart dam and power station near Campbell River.
I wrote about this odd situation some years ago, in an article titled Curious deal in BC’s pay-to-play economy:
In the last holiday season, while few journalists were paying attention, a new chapter emerged in the weird mix of public and private power in British Columbia. BC Hydro announced upgrades to the John Hart dam near Campbell River. The project is estimated to cost up to $822 million. Given the utility’s history of inaccurate budgeting, that number might double.
I surmise this is another situation where private companies profit more than they should and the public pays more than it should. But exact details are hidden. As is common with public private partnerships, the public knows little more than the cash outflows can be staggering.
This listing does not include all public payments benefiting the Quebec based company that is so popular with politicians and senior civil servants across the country. One example is PROTRANS BC, a subsidiary of SNC-Lavalin Inc. that is the private operator of the Canada Line,
SNC-Lavalin tells investors its affiliate InPower BC is highly profitable. BC Hydro supposedly believes the arrangement for this relatively small Vancouver Island facility is appropriate. But having entered into a long term deal to pay In-Power, BC Hydro now will spend a huge sum to rebuild the dam that serves In-Power’s John Hart Power Station. SNC-Lavalin will collect major fees for this new construction project, as it does on other BC megaprojects.
In other private power arrangements made with BC Hydro, initial, politically connected contractors flipped the deals for quick wins. According to business media, SNC-Lavalin sold 80% of InPower BC even before it was fully operational:
SNC-Lavalin holds a 20% interest in InPower BC, which was launched in 2017. The initial closing of the first four assets took place on September 27, 2017, and the transfer of a fifth asset was completed on June 28, 2018.
Were BC Hydro operated for the benefit of citizens and ratepayers, it would seek out the lowest cost supplies of electricity. Because it is not, we get deals for the most expensive power produced anywhere.
Horgan’s BC NDP presented an appealing energy policy to the public before taking power in 2017. Note paragraph 3 where they spoke of Revelstoke Unit 6. Forty-five percent of the capacity of Site C for three percent of the cost. In the end, that spending efficiency did not appeal to empire builders enjoying high priced employment at BC Hydro.
At 138 MW, the John Hart generating capacity is one-eighth the capacity of Site C. In 2003, BC Hydro estimated a new John Hart powerhouse would cost $210 million ($271 million in 2018 dollars). When completed, it was said to be a $1.093 billion project, which is four times the original estimate.
If the $822 million estimate for a new John Hart dam increases by only 50%, the capital cost per megawatt of capacity of the Campbell River facility would be extraordinary.
Categories: BC Hydro