Sarah Cox of The Narwhal is the journalist I trust most on issues involving BC Hydro. The important takeaway of her latest is that the utility has zero regard for transparency and little interest in keeping the public informed.
This should be unacceptable. The corporation is vital to the BC economy and is the custodian of $46 billion in public assets and is obligated by contracts to pay more than $50 billion to others.
BC Hydro chose to not accurately report expenditures on Site C through direct-award contracts that involved no public bidding or open competition. One of the beneficiaries was SNC-Lavalin, a company previously involved in questionable behaviour and illegal practices;
For one previous no-bid contract, SNC-Lavalin provided BC Hydro with a “shadow estimate” for its forecasted $8.3-billion price tag for the dam. A shadow estimate reviews numbers and costs to confirm they are accurate. SNC-Lavalin’s estimate proved to be wildly wrong, missing the mark by more than $7 billion. Since then, the engineering firm has pulled in tens of millions of dollars in sole-source Site C dam contracts that were not part of the project’s original budget.
Sarah Cox, The Narwhal
BC Government rules for direct-award contracts require that business arrangements should be competed for to the extent reasonable, and direct awards must not be used for the purpose of avoiding competition.
Direct awards are acceptable if it can be “strictly proven” that only one contractor is qualified, or is available, to provide goods or services. These awards are also acceptable if an unforeseeable emergency exits or if the need cannot be obtained in time by means of a competitive process.
BC Hydro blamed the incorrect reporting on human error now corrected. I blame the corporation’s unwillingness to regularly issue online reports with full explanations of material value contracts recently issued without open bidding. Diligent journalists like Sarah Cox should not have to rely on FOI responses long after the utility has committed large sums to private contractors.
Boston University economist Dr. Jetson Leder-Luis studies fraud in public spending. He estimates that fraud in large projects may divert five percent of spending. On the Site C power project, that suggests fraud could amount to hundred of millions of dollars. BC Hydro’s lack of transparency encourages corruption.
As a monopoly service provider, full transparency would be helpful, not hurtful to BC Hydro. It would improve the public’s low level of confidence in the utility, which is vital as we proceed with accelerated electrification.
A paper published in the International Journal of Project Management makes these points:
- Corruption is extremely relevant for the planning and delivering of public projects.
- Corruption is under-researched in the project management literature.
- Features such as large project size, uniqueness, and complexity favour corruption.
- Megaprojects have most of the features favouring corruptions.
- Megaprojects performance worsens in corrupt project contexts.
Sunshine laws stipulate that certain business operations or government activities provide open transparency and disclosure to the public or upon inquiry.
The purpose of these laws is to promote ethical standards, prevent fraud and corruption, and by doing so engender greater public trust.
What Are Sunshine Laws?
Categories: BC Hydro
in-sights.ca 
Question…..What is the incentive for the provincial government
to hold BC Hydro’s hands to the fire and demand a ongoing timely
financial reporting framework for the benefit of BC taxpayers?
Possible answer…there isn’t one. Who does the auditing function?
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“The British Columbia Utilities Commission (BCUC) is an independent agency of the Government of British Columbia that regulates BC’s energy utilities, the Insurance Corporation of BC’s (ICBC) compulsory automobile insurance rates, intra-provincial pipelines and the reliability of the electrical transmission grid.”
https://www.bcuc.com/AboutUs/FAQ
The following article by Sarah Cox from March 16, 2018 explores the lack of transparency of BC Hydro regarding the Site C boondoggle; facilitated by Gordon Campbell’s Liberal Government which blocked the BCUC from their crucial role of protecting BC Taxpayers from potentially reckless, expensive, unjustifiable projects:
https://thenarwhal.ca/auditor-general-nudges-b-c-amend-act-exempted-site-c-dam-independent-review/
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Thks Alex for the link. I don’t subscribe to the free Narwahal. I am
oversubscribed to doom and gloom sites. Gotta downsize to maintain
some kind of a life these days but I still
wonder why some blocking legislation can’t be reversed…..because
their is no incentive for the NDP to do so and we don”t demand it.
The “it was blocked” does not also mean it could not be changed in my mind. The risk would be minimal. For example we still have Trudeau
with Trans Mountain in tow.
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This is an additional article on the subject of lack of Site C transparency and oversight at BC Hydro — by Justine Hunter on Jan. 12/15 (The Globe and Mail): https://www.theglobeandmail.com/news/british-columbia/bc-ignored-calls-for-oversight-in-site-c-dam-ruling/article22422910/ “B.C. ignored calls for oversight in Site C dam ruling”
“Weeks before the B.C. cabinet circumvented an independent utilities watchdog and approved the $8.8-billion Site C hydro dam, Energy Minister Bill Bennett’s own hand-picked panel of experts advised him to restore the role of the “essential” BC Utilities Commission in scrutinizing such projects.”
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BCUC cannot be an effective regulator when commissioners are appointed by and serve at the pleasure of the provincial government, whether BC Liberal (aka Bcup) or BC NDP. Additionally, government can limit the regulator’s inquiries with an Order-in-Council passed without involvement of all members of the Legislature.
The right of government to interfere whenever they choose, or to remove Commissioners and deprive them of compensation worth hundreds of thousands of dollars, has a chilling effect. Without expressing the words, government sends this message, “Do as we wish, or you’re gone.”
I remember when radio guy Bill Good said, “Nobody has ever told me what to do or say.” The answer of course was, “No Bill, they didn’t have to, and they knew that when they hired you”
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So, what else in new, we have spent $15 billion so far on the SkyTrain light metro system and are now spending $11 billion more on a proprietary railway, that was deemed obsolete since 1983; with only 7 sold in the past 43 years (now only 6 in operation), and has had it marketing name changed 6 times (ICTS>ALRT>ALM>ART>IRT>MALM)
The last bidding process for the now MK.5 cars saw the underbidder (CRRC) not having a working vehicle or even plans for one! In short it was a mock auction, which is illegal in Canada, especially with government procurement.
So what would you call that? The F**** word or typical business practices in BC!
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Thks to all for replies. The light intensity of totalitarianism rule everywhere
these days makes it almost mandatory to be wearing sunglasses all the
time.
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BC’s Auditor General conducted an audit for the period December 2014 to January 2022 to determine if BC Hydro had established a program to effectively manage fraud risk on the Site C dam and hydroelectric energy project. Among other findings, it was determined that prior to this audit, BC Hydro had not performed fraud risk assessments for Site C, had established no fraud risk program for it to monitor and evaluate, nor had it assigned fraud risk management responsibility to a senior BC Hydro executive.
Now, one would expect audit findings of this nature to attract much attention from our elected officials, and that they would welcome the opportunity to get BC Hydro representatives in front of them to explain how it was that eight years into the largest infrastructure project in the province’s history, and with massive budget overruns making headlines, such a serious deficiency could exist.
Luckily, just such a forum is well established. It’s called the Select Standing Committee on Public Accounts. The following link details the severe grilling BC Hydro received at the hands of our elected officials.
https://www.leg.bc.ca/documents-data/committees-transcripts/20220530am-PublicAccounts-Victoria-n28
Did you weep when you read that? Become outraged? Or both?
Twenty-four minutes, start to finish. Most of it filled with self-promoting nonsense, and statements that raise many questions beyond the obvious ones flowing from the audit itself. Not one question from the committee members save for the one posed by the Chair, and it was a jaw-dropper, worthy of the Inspector Clouseau Award. As the esteemed Chair stated in wrapping up, “It looks like you got off easy today then.”
Yes, they did. And the general public should be wondering who else is getting off easy. With a possible share of five percent of sixteen billion dollars.
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