Reports on Hydro fiascos in Manitoba and B.C. expose the rot at Crown-owned utilities

4 March 2021

 

Transmission lines, Globe and Mail
Full text of this excellent piece by Konrad Yakabuski in the Globe and Mail, March 4, 2021
Misery loves company. And so it was that taxpayers in Manitoba and British Columbia found themselves commiserating last week with the release of separate reports detailing the mismanagement and dissimulation that has left them to foot the bill for uneconomic hydroelectric projects championed by provincial monopolies with dreams of empire.
The reports on Manitoba Hydro’s Keeyask dam and B.C. Hydro’s Site C generating station were eerily similar in how they enumerated the factors that led to massive cost overruns on both projects, beginning with complacent politicians and a lack of independent oversight at the government-owned utilities that had promoted them. The reports also read much like the findings of an earlier inquiry into the financially ruinous Muskrat Falls project in Newfoundland and Labrador.
In all three cases, provincial premiers allowed their better judgment to be clouded by a desire to build personal legacies in the form of gigantic dams that they perhaps hoped might one day be named after them. They allowed the heads of their respective Crown-owned electrical monopolies to indulge their own empire-building instincts to pursue those projects based on rosy assumptions concocted to dazzle unsuspecting taxpayers and avoid scrutiny.
Politicians of all stripes fell into this trap. In Manitoba, it was former New Democratic premier Gary Doer’s government that authorized construction of Keeyask dam and Bipole III transmission line, the costs of which have ballooned to $13.4-billion from an initial estimate of $9.7-billion, and led to a tripling of Manitoba Hydro’s debt in 15 years.
In 2008, Mr. Doer declared that “hydroelectricity is Manitoba’s oil,” suggesting his have-not province might get rich by exporting power to midwestern U.S. states hungry for clean energy. This was always a pipe dream, since continental electricity prices were already then beginning a steep descent because of a glut of cheap natural gas and the increasing attractiveness of alternative sources of renewable power. The oil-electricity analogy was also highly misleading. In 2019, for instance, Canada exported $87-billion worth of crude oil. Electricity exports totalled a mere $2.5-billion, mostly from Quebec.
As last week’s report from an independent review of Keeyask and Bipole III, led by former Saskatchewan premier Brad Wall, concluded: “The incomplete analysis of the projects, driven by government endorsement, a construction contract that deferred construction risk to Manitoba Hydro, and a lack of effective project oversight at the corporate level, led to project delays and significant cost overruns.”
As a former right-leaning premier of an oil-producing province, Mr. Wall may not have been the best choice to lead the review commissioned by Manitoba’s Progressive Conservative Premier Brian Pallister. But his exhaustive report, which runs more than 14,000 pages with appendices, should put to rest charges by Mr. Doer and others that this was just a partisan exercise.
In B.C., former provincial deputy finance minister Peter Milburn’s report on the Site C fiasco found a similar story of politicians rushing to sign off on a megaproject without due diligence. In this case, it was former Liberal premier Christy Clark’s government that gave the go-ahead to Site C in 2014, forgoing a prior independent review by the B.C. Utilities Commission.
Premier John Horgan’s New Democrats, which had opposed Site C in opposition, put in place a “project assurance board,” or PAB, that was supposed to keep tabs on B.C. Hydro. It also hired consultants Ernst & Young to provide an additional layer of oversight. But the PAB, Mr. Milburn found, was stacked with B.C. Hydro board members, while E&Y appears to have been systematically kept out of the loop by officials at the provincially owned utility.
“Ultimately, B.C. Hydro determined the amount and type of oversight they would receive from EY,” Mr. Milburn wrote. “This appears inconsistent with the concept of independent review and with B.C. Hydro’s commitment to government.”
Astonishingly, Mr. Horgan has chosen to make only cosmetic changes at B.C. Hydro in the wake of Mr. Milburn’s report and a jaw-dropping revision to Site C’s budget. The project is now slated to cost $16-billion, or almost twice the $8.7-billion it was estimated to cost in 2014, with no guarantee that further problems won’t still arise as B.C. Hydro seeks to reinforce Site C’s shaky – literally – foundations.
Mr. Doer and Ms. Clark may have thought they were following in the footsteps of the visionary premiers of the past – Manitoba’s Duff Roblin and B.C.’s W.A.C. Bennett – by developing their provinces’ hydroelectric potential. But those earlier mid-20th-century projects were pioneering feats that paid off because of the unbeatable natural attributes. Keeyask, Site C and Muskrat Falls were subpar in comparison.
That all three projects were allowed to proceed speaks to the rot within Canada’s Crown-owned electrical utilities. It is beyond high time someone cleaned house.

BREAKING: West Moberly First Nations Threaten Court Action Regarding Site C Safety Risks

25 January 2021

Also see story here.

WEST MOBERLY FIRST NATIONS

PRESS RELEASE

Court Motion Brought to Access Site C Safety Risks Kept from Public

First Nation “actively considering” new court injunction if work on “unsafe, unnecessary, and unlawful” Site C dam continues

January 25, 2021. Moberly Lake, B.C: In an open letter to the Premier and his cabinet, Chief Roland Willson of West Moberly First Nations has called for an immediate suspension of work on the “unsafe, unnecessary, and unlawful” Site C dam until there is a cabinet decision on cancellation.

News of serious problems with the dam’s foundations surfaced publicly in July of last year, but documents obtained by reporters reveal that BC Hydro knew of the problems as early as September 2019. Today, nearly one and a half years later, construction continues at a cost of $100 million per month with no safe solution to the problems in sight.

Details of the escalating costs and safety concerns remain shrouded in secrecy, with BC Hydro withholding its two latest progress reports from regulators and the Premier refusing to release the report prepared by his special advisor, Peter Milburn. Chief Willson’s open letter reveals that his First Nation will bring a court motion to obtain the information being kept from the public. This includes Peter Milburn’s report, two new expert reports commissioned by BC Hydro, and all draft reports, terms of reference, emails and geotechnical information.

The open letter warns that West Moberly is “actively considering” a return to court for a new injunction if the Premier allows construction to continue. In October of 2018, the Court denied a previous injunction but stated that a new injunction could be granted if there was an “unforeseen and compelling change in circumstances” before trial.

In the letter, Chief Willson urges the Premier to make good on promises to implement the United Nations Declaration on the Rights of Indigenous Peoples and to uphold the rights guaranteed by Treaty 8:

“You can reject the madness of ploughing ahead with this unnecessary, unsafe, and unlawful project. You can choose instead to immediately suspend the project. You can work with West Moberly and other Indigenous treaty partners to provide truly clean energy alternatives that meet the needs of all British Columbians. You can show Canada and the world that the only way to escape our colonial history of neglect and betrayal is to act boldly and honourably in the decisions that lie before us today.”

Read the open letter here:

https://issuu.com/sagelegal/docs/2021_01_25__ltr_chief_willson_to_premier_re_site_c

Globe editorial: The Site C dam has been a disaster in the making for decades. Should B.C. pull the plug?

3 January 2021

Globe and Mail editorial, January 3, 2020

The report must have landed on British Columbia Premier John Horgan’s desk with a thud. It was not a welcome Christmas present.

The report in question is an independent assessment of the troubled Site C hydroelectric dam under construction on the Peace River in the province’s northeast. It was scheduled to hit the Premier’s desk in the days before Christmas, and could be made public as soon as this week.

It will be grim. How grim is the question.

Last summer, BC Hydro revealed Site C was in big trouble. A shaky foundation on the river’s right bank threatened the stability of the dam, and costs were spiralling. The $10.7-billion project was already over budget, with about half the money spent. Mr. Horgan ordered an independent review and said halting Site C for good was possible.

“If the science tells us and the economics tells us that it’s the wrong way to proceed, we will take appropriate action,” the Premier said.

If this sort of story sounds familiar – big dam, big promises and big problems – that’s because the saga of Site C has many prequels in the world of hydroelectric megaprojects. Backers exaggerate the benefits and minimize the challenges; then construction starts and predictable surprises pop up like weeds. What started life as a reasonable idea is suddenly twice as expensive – and no longer so reasonable.

In Newfoundland and Labrador, the Muskrat Falls dam is, at $13.1-billion, more than double its original budget. It has pushed the province to the financial brink. Ottawa, which had guaranteed $7.9-billion of project debt, stepped in again in mid-December and deferred $844-million in payments. Power is finally supposed to flow late next year.

The feds are also aiming to make Muskrat Falls viable – or are they throwing good money after bad? – by backing the so-called Atlantic Loop, a network to carry the electric power to Atlantic Canada.

For B.C., there is still time to turn back at Site C, as difficult and financially gutting a choice as that may be. Killing the project now means $6-billion-plus spent for zero power. But it may make sense, if pushing forward means a final bill at upwards of $15-billion.

There is bipartisan blame for this mess, which is decades in the making. There are two large dams on the Peace River, one completed in 1968 and the second in 1980. They have supplied plentiful and affordable power to the province. The plan had always been for a third dam. In 1967, a spot near the Alberta border, Site E, was seen as the best location. The terrain was firm, but it was rejected because of cost.

Instead, a decade later, the seemingly cheaper but geologically troublesome Site C was chosen.

In the 2000s, building Site C became a priority of the BC Liberals. It was exempted from an independent review and construction started – with a budget of $8.8-billion – in 2015. Former premier Christy Clark promised to get the work beyond the point of no return. In 2017, the NDP formed government. They had opposed Site C but Mr. Horgan decided to push forward. Mike Harcourt, a former NDP premier, in 2017 called Site C a “clear, unmitigated disaster.” And that was when only $2-billion had been spent.

More warnings came behind closed doors, before finally spilling out last summer.

Mr. Horgan’s first big decision as Premier in 2017 was whether to continue construction at Site C. The first big decision of his second term will once again be Site C.

Is the project already so far along that stopping it makes no sense?

In October, the C.D. Howe Institute released an analysis from two hydro experts, which concluded that the case for Site C is “getting weaker.” At $10.7-billion, it is only “marginally economic.” Cancellation, the report said, should be on the table if costs jump. At $15-billion, it makes more sense to shutter Site C, absorb the costs, and invest in wind power and battery storage, the report said. Wind power plus battery storage would also allow for smaller projects, rather than one huge one.

Site C was always a problematic place to build a large dam. Numerous decision makers over the years pushed ahead anyway.

Now, Mr. Horgan has to eyeball the sums and consider the conclusions in that report on his desk – and decide whether prudence means pressing forward, or turning back.

Globe and Mail: B.C. needs a public inquiry to sort out the Site C mess

31 December 2020

By Konrad Yakabuski, Globe and Mail, December 31, 2o20.
Article is paywalled so full text is here.

The evidence is now indisputable that British Columbia’s Liberal government erred in 2014 in approving construction of the Site C hydroelectric dam on the Peace River, and that the province’s current NDP administration should not have allowed the project to proceed in 2017.

The question now facing Premier John Horgan is whether, more than five years into construction and with about $6-billion spent on the 1,100-megawatt hydro generating station, his government can pull the plug on the project without causing more problems than it solves.

Either way, it is a bad situation that calls for a public inquiry into how Site C got this far in the first place. The pattern of a provincial hydroelectricity monopoly influencing gullible politicians to back its anti-competitive ambitions regardless of the costs is a familiar one in Canada. In its desire to block potential renewable energy interlopers on its turf, BC Hydro appears to have provided its political overlords with a less than fulsome explanation of the downsides of Site C.

This is not to say Mr. Horgan and former Liberal premiers Christy Clark and Gordon Campbell do not bear blame for what is becoming a financial fiasco. Independent energy experts warned them against building Site C, arguing that BC Hydro had used questionable assumptions about future demand and the cost of alternatives to make the economic case for Site C.

The risk that Site C would become a financial sinkhole was not even the biggest strike against the project. It had been common knowledge that Site C was a suboptimal location for a big hydroelectric project. There was a reason for that. The best sites in B.C., and indeed across Canada, had all been developed by the 1970s. Since then, provincial hydroelectric utilities had been pushing increasingly marginal developments to satisfy their thirst for empire building.

The extent of the problems now facing Site C and the likely cost of fixing them have been the subject of a review commissioned by Mr. Horgan after BC Hydro’s July disclosure that “foundation enhancements would be required to increase the stability below the powerhouse, spillway and future dam core areas.” In other words, the worst-case scenario that geological experts had warned about from the outset had, in fact, materialized. Quelle surprise?

In October, The Narwhal published the results of a months-long investigation based on Site C documents, obtained under a Freedom of Information request. The report noted that the technical advisory board overseeing Site C warned in May, 2019, that the stability of the dam is “a significant risk and the hazards of the weak foundation have been adequately recognized.”

Mr. Horgan has insisted that he was not aware of the geotechnical issues facing Site C until BC Hydro disclosed them publicly in July, more than 14 months after the technical advisory board had shared its conclusions. It remains unclear who knew and when about Site C’s problems along the chain of command within government leading to Mr. Horgan’s office.

“We put in place significant oversight on this project and it hasn’t proven to be adequate at this point,” Mr. Horgan this month told Vancouver Sun columnist Vaughn Palmer.

Frankly, that is not good enough. Only a public inquiry, similar to the one Newfoundland and Labrador conducted to get to the bottom of the Muskrat Falls boondoggle, can identify those responsible for allowing a misguided project to continue unchecked. The original $8-billion cost of Site C was revised to $10.7-billion in 2017. But foundation reinforcements alone could boost the construction price tag by another $2-billion. More cost overruns seem inevitable.

Mr. Horgan punted a decision on Site C’s fate until after last October’s provincial election by appointing Peter Milburn, a former deputy minister of finance under Ms. Clark, to recommend whether the project should be halted. Few observers are betting on Mr. Horgan to pull the plug on Site C, however. Organized labour, a major force within the NDP, has been a big supporter of the project and the construction jobs it has brought.

There are still a few optimists who believe the economic case for Site C could be salvaged if B.C. could sell power from the project to Alberta, enabling the latter province to decarbonize its electricity grid. Interprovincial electricity co-operation is, however, one of those uniquely Canadian ideas that never materializes. Besides, private electricity producers in Alberta have invested billions in natural gas-fired generating capacity that can keep the lights on at a far lower cost than power from Site C, even if the gap will shrink gradually as carbon taxes rise.

It will take a public inquiry to expose the folly that led B.C. to this very bad place.

 

BREAKING: Halt Site C – former Hydro CEO Marc Eliesen, dam engineer Ken Farquharson

1 December 2020

FOR IMMEDIATE RELEASE:

Halt Site C and launch probe into lax safety oversight of dam project, longtime dam engineer and former BC Hydro CEO urge government

The BC Government is not doing near enough to ensure that a safe dam is built at Site C, says a former CEO and president of BC Hydro and a retired engineer with more than four decades experience, including at BC Hydro’s Mica and Keenleyside dams.

“The government is knowingly taking advice on Site C from an ‘independent engineer’ with deep ties to BC Hydro. It’s also acted swiftly on one notable occasion to accept that engineer’s advice when circumstances called for extreme caution. And now we have big problems at Site C. As a former engineer and a resident of British Columbian, I am deeply concerned by the government’s attitude when it comes to the safety of this project,” says Ken Farquharson.

Farquharson, former BC Hydro CEO and president Marc Eliesen, and the Peace Valley Landowners Association are calling for an immediate halt to construction at Site C and the appointment of an independent panel of experts with no ties to BC Hydro to assess all geotechnical and safety risks at Site C as well as the government’s oversight of the project.

The call comes after new research was released today by the Canadian Centre for Policy Alternatives showing that:

The provincial government office responsible for dam safety is knowingly taking advice on BC Hydro’s Site C project from Tim Little, an “independent engineer” who worked for years for BC Hydro and who continues to be paid as a consultant by the utility.
As of January, provincial dam safety officials had received 137 reports from Little, including one where he recommended a radical alteration to construction plans. The government took just hours to approve the risky change.
The change resulted in massive amounts of concrete being poured at Site C long before a critical drainage tunnel was completed first. Now, the dramatically altered building plan appears to have contributed to all of that concrete moving.
The government promised to release all of Little’s reports to the CCPA, but after a seven-week delay told the CCPA it would have to file a time-consuming Freedom of Information request instead. Only two of Little’s reports are in the public realm as part of a filing in BC Supreme Court.

“There are people living in the Peace Valley whose lives are most at risk should Site C be built and later fail,” says Ken Boon, a Peace Valley farmer and president of the Peace Valley Landowner Association. “The government owes a duty to them, and everyone else, to take its responsibilities for dam safety seriously. Given the mounting geotechnical problems at Site C, the safest most responsible thing to do would be to scrap this project all together.”

 

“With $5 billion to $6 billion already spent on this boondoggle of a project, the public deserves to know whether Site C can be safely completed, if at all,” Eliesen said. “Sadly, the CCPA has unearthed ample evidence that the government isn’t taking its regulatory responsibilities nearly seriously enough. Ensuring the safe design, construction and maintenance of all dams in the province is the government’s regulatory responsibility. It’s long past time that the government took that responsibility seriously.”

Media contacts:

Ken Boon
Marc Eliesen
Ken Farquharson

Media questions, call 604-313-7744

Please also see the exposé by Ben Parfitt of the BC CCPA, out today: Who’s minding the shop at Site C?

What happened to the BC NDP’s PowerBC energy plan?

1 November 2020

BC NDP graphic for their abandoned PowerBC energy plan, showing undamaged Peace River Valley

BC NDP graphic for their abandoned PowerBC energy plan, showing undamaged Peace River Valley

Have a look at the clean energy plan the BC NDP promoted while in opposition before 2017: “PowerBC.” It stands in stark contrast to the NDP’s current “CleanBC” plan, which unlike PowerBC, involves both fracking/LNG and the Site C dam, with the latter functioning to greenwash the former. PowerBC has somehow nearly been scrubbed from the internet, so we are uploading some materials from it here for the historical record.

Download the PDF: POWERBC: John Horgan’s energy and jobs plan for BC | New Democrat BC Government Caucus

In the 2017 election, it was assumed that PowerBC was the energy plan that the NDP was running on. It’s mentioned in the NDP’s long 2017 election platform, but only a meager six times. However, and chillingly, the phrase “Site C” is not mentioned ONCE in that election platform. Have a look and try it yourself.

Nevertheless, the BC electorate was under the impression that the BC NDP was running on the PowerBC plan, which excluded the Site C dam.

PowerBC explicitly excludes the Site C dam as an energy source, even using images of an undamaged Peace River Valley in some of its key graphics. It doesn’t pretend that fracking and LNG are “clean energy” but speaks instead of solar and other renewables, retrofitting buildings, increasing capacity on existing dams (Revelstoke Dam still has an empty bay for a major turbine that was never added!), and much more.

You may enjoy this page from PowerBC’s promotional materials, where an academic who then became a lobbyist for Site C, SFU’s Marv Shaffer, is on record saying that BC doesn’t need Site C. How priorities change at the drop of a hat, or election, or lobbying contract…

The section below is interesting, because for BC Hydro to pursue adding renewables like solar and wind and geothermal, Horgan and the NDP would have to have reversed some legislative changes made by Gordon Campbell and the BC Liberals which:
• restricted BC Hydro to only hydroelectricity
• forced BC Hydro to build Site C instead of cheaper renewables
• sidelined BC’s energy watchdog the BC Utilities Commission from oversight of energy and Site C
But the NDP noticeably didn’t make those absolutely key legislative reforms, when it would have had Green support to do so. Instead, it didn’t restore our watchdog so we have no oversight, and we can’t pursue far cleaner and cheaper renewables or save a key agricultural and ecologically important valley.

Then there’s this excellent idea: instead of building Site C, increase power generation at our existing dams, which we have not yet even begun to do.

People tend to get politically activated only during elections then fade away. But only organizing and activism between elections wins real change. To all those who campaigned for and/or voted NDP: now help us challenge their disastrous “CleanBC” plan. Please pressure your NDP MLA to cancel Site C, abandon the environmentally disastrous and uneconomic fracking/LNG plan, and return to the sanity of the NDP’s PowerBC plan. It was a good, modern plan. CleanBC, with its fracking and outdated, overexpensive and unnecessary mega-dam, is not.

And sign the new petition if you haven’t already, please. But it’s more important to sink your teeth into the legs of your local NDP MLA (figuratively speaking only) and don’t let go until Site C and fracking are abandoned.

The unnecessary Site C dam is shaping up as BC’s Muskrat Falls

20 October 2020

The unnecessary Site C dam is shaping up as B.C.’s Muskrat Falls
By Konrad Yakabuski
theglobeandmail.com
October 20, 2020
The story is paywalled, so full text is below.

The Site C Clean Energy Project launching of the super structure bridge off the causeway to an island, spanning the back channel of the Peace River, in October, 2019.
The Site C Clean Energy Project launching of the super structure bridge off the causeway to an island, spanning the back channel of the Peace River, in October, 2019.

 

In the past decade, Canada’s provincially owned hydroelectric utilities have sold gullible politicians on more than $50-billion in unnecessary dam and transmission projects.

From the Muskrat Falls project in Newfoundland and Labrador to the Keeyask dam in Manitoba and the Romaine River development in Quebec, the Canadian landscape is now blighted by big hydro projects that would never have seen the light of day had they been subject to independent and transparent analysis.

Residential and industrial customers now face sharply higher electricity rates as these projects come onstream. Instead of the juicy export profits that their backers promised, these projects face production costs that are significantly higher than the price their energy can fetch in a U.S. market awash in cheap gas-fired, solar and wind power.

This situation was entirely foreseeable when these projects were approved by premiers touting jobs and economic development. Unfortunately, it is too late to turn back the clock. All three projects are nearing completion.

There is still time, however, to pull the plug on British Columbia’s Site C hydro project before it ends up joining this trio of white elephants.

Both the incumbent New Democrats and opposition Liberals have avoided talking about Site C in the runup to Saturday’s provincial election. That is not surprising. Both parties are complicit in pushing ahead with a development experts warned was far too risky.

The Liberals gave the green light to Site C when they were in government in 2014 and the minority NDP government decided to forge ahead with the project in 2017. Since then the projected cost of Site C has continued to rise – to about $11-billion – while consumer demand and export prices have continued to fall.

Hence, the 1,100-megawatt project was already headed for trouble before BC Hydro disclosed in July that geotechnical risks that had been played down during the project’s approval phase had come back to haunt the utility. The foundation reinforcements required to fix the problem could cost upward of $2-billion and delay completion by a year or more. The final cost could total more than $13-billion.

This further undermines the already shaky economics of Site C, which will leave B.C. with huge electricity surpluses for decades to come. BC Hydro will likely be forced to liquidate these surpluses on the U.S. spot market at a fraction of the cost of production.

Export prices have plummeted by more than half since 2014 because of an abundance of natural gas south of the border and the rapidly falling costs for solar and wind power. In 2019, Canadian electricity exports fetched an average price of $40.70 a megawatt hour, compared with $87.23 a MWh in 2014, according to Canada Energy Regulator data.

As a result, net electricity exports fell to $1.9-billion last year from $2.8-billion in 2014. Hydro-Québec accounted for the bulk of those sales, owing to its vast reserves from older dams in Quebec and the 46-year-old Churchill Falls project in Labrador.

Site C has seen its production costs follow a steep upward slope since the project was first approved. Those costs are now expected to exceed $120 a MWh, according to some estimates. Given the environmental costs involved in damming and diverting the Peace River in Northern B.C. and geotechnical problems that threaten the project’s stability, the case for proceeding with Site C has simply become untenable.

Yes, halting construction on Site C would still leave B.C. taxpayers on the hook for several billion dollars in sunk costs, without any electricity to show for it. But killing the project remains the least costly option facing the province. Borrowing billions more to complete the project would make an already bad situation worse.

Pulling the plug on Site C would take political courage. But whoever wins Saturday’s election can no longer ignore the evidence. This project is headed in the wrong direction and there is no reasonable prospect of turning it around.

The inquiry into Muskrat Falls led by Newfoundland Supreme Court Justice Richard LeBlanc should serve as a warning to B.C. politicians still defending Site C. It concluded that successive Newfoundland governments failed in their “duty to ensure that the best interests of the province’s residents were safeguarded” and improperly placed their “faith and trust” in Nalcor, the provincial Crown corporation overseeing Muskrat Falls. Nalcor, the report added, “exploited this trust by frequently concealing information about the project’s costs, schedule and risks.”

The same story appears to be unfolding at Site C. The next B.C. government has one last chance to avoid an equally disastrous ending.

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Thanks to Margaret Atwood for tweeting this story! PLEASE SIGN THE PETITION!