Province will complete Site C dam with new $16-billion price tag

Site C will be completed

Premier John Horgan said Friday the province will continue building the Site C dam on the Peace River following the latest economic and geotechnical reviews of the now $16-billion project.

The NDP cabinet made the decision to continue to the project after independent experts confirmed the dam was safe. The revised cost includes a one-year delay that pushes the dam’s in-service date to 2025, which the government said was primarily due to the COVID-19 pandemic, followed by foundation enhancements needed where the dam’s spillway and powerhouse are being built.

“When we made the decision to move forward with Site C in 2017, none of us could have imagined the impact that the pandemic would have on projects here in B.C. and around the world,” said Premier John Horgan in a statement.

“The project is facing new challenges, and we are committed to managing it in the best interests of British Columbians. Cancelling it would cause people’s electricity rates to skyrocket, and we will not burden people with additional financial stress during these difficult times with nothing to show for it. Site C is already 50% finished, and our government will complete this project, ensuring British Columbians have clean and affordable power for decades to come.”

Last year, the NDP government appointed Peter Milburn, a civil engineer and former deputy minister of finance, to determine if the economics of completing the project still work, given its rising costs.

The province has released Milburn’s review (below) with 17 recommendations to improve oversight of the project and governance at BC Hydro.

The province has also released geotechnical reports by international experts John France and Kaare Hoeg (below) evaluating the geotechnical and safety issues.

The province said their review confirmed the foundation enhancements developed to address geotechnical and foundation movements on the project’s right bank will work, and meet guidelines set by the Canadian Dam Association.

According to the province's geotechnical safety review report, small movements in the millimetres began to occur on a bedding plane during excavations for the dam's spillway buttress in 2018.

Those displacements were reassessed in 2018 and 2019, and by January 2020, the province said BC Hydro concluded that more significant foundation enhancements would be needed.

The province said the solution to the foundation issues include installing up to 125 steel and concrete piles to extend the foundation a further 15 to 25 metres into bedrock. Approach channel enhancements and additional drainage will reduce the water pressures that can build up in the bedrock foundation, the province said.

"The design of the piles system extends the foundation to a depth where undetected weak bedding planes can’t affect the stability and long-term performance of the structure," reads the province's geotechnical review report.

Work to implement these measures could begin as early as summer 2021 and will be completed by the end of 2023, the province said. Contractor schedules are being reviewed to reflect COVID-19 delay impacts and to build the foundation enhancements, it said.

The province says a separate review of the main earthfill dam has concluded the dam design is safe, and that any enhancements would be "low cost and non-intrusive," such as adding more fill and rock to the surface of the downstream portion of the dam. Instrumentation and monitoring throughout the life of the dam as a continued precaution will help ensure safety, the province said.

Both France and Hoeg have been retained to provide oversight to BC Hydro while construction of the foundation enhancements are completed, the province said.

Meanwhile, former BC Ferries and TransLink CEO Doug Allen has been appointed the new chair of BC Hydro’s board. He replaces Ken Peterson, who was appointed after Horgan first formed government in 2017.

“Our government has taken this situation very seriously, and with the advice of independent experts guiding us, I am confident in the path forward for Site C,” said Energy Minister Bruce Ralston.

“B.C. needs more renewable energy to electrify our economy, transition away from fossil fuels and meet our climate targets. Site C will help our province achieve these things and is currently employing about 4,500 people in good-paying jobs.”

Construction on Site C began in summer 2015 under the BC Liberals at an approved cost of $8.7 billion.

That jumped to $10.7 billion in 2017 after Horgan and the NDP first chose to finish the project after a review by the BC Utilities Commission.

About $6 billion has already been spent so far, with 4,428 employed on the project in December. There were 1,112 workers at the work camp Friday.

The province said stopping Site C now would have “severe impacts” to ratepayers and taxpayers, who would be better off completing the project at this stage, even with the cost increases.

The costs to cancel the project, including sunk costs and the costs to remediate the site, would be at least $10 billion, excluding the costs of replacing the lost energy and capacity that Site C would have provided, the province said.

Paying off that debt would equal about $216 a year, over 10 years, for the average residential BC Hydro customer, according to the province. If taxpayers were to take on the debt, the province said its credit rating could be downgraded and put pressure on its ability to fund COVID recovery and other needed capital projects.

Continuing with Site C at the new $16-billion cost estimate means cumulative bill increases will be about $36 a year higher for the average residential customer, or 3% higher by 2030 than under BC Hydro's prior rates forecast, the province said.

The cost of the dam is being amortized over 70 years once its complete and operational, with the Utilities Commission responsible for determining rates, the province said.

Construction has continued at the dam throughout the NDP government's latest review over the fall and winter.

Both upstream and downstream cofferdams have sealed off the Peace River to build the kilometre-long earthfill dam, which will stand 60 metres high.

BC Hydro says the upstream cofferdam was recently completed to its final elevation, 24 metres high above the riverbed.

Construction crews have been pouring concrete at the lower level spillway gates this month, and work continues on the new $104-million Halfway River Bridge, where all 12 bridge piers are complete and steel girders are being installed on top.

The first two turbine runners arrived at the site in January and February after arriving in B.C. from Brazil last year.

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