B.C. Hydro said it will miss a critical river-diversion milestone in the Site C dam construction, adding an estimated CA$610mn to the controversial project’s budget.
Yesterday, CEO Chris O’Riley issued a response to questions by the B.C. Utilities Commission that were raised by the Commission after two reports by Deloitte were released on September 8th.
Deloitte has so far found the project's CA$1.75-bn main civil works contract was CA$136mn over budget when it was awarded in December 2015, and two months behind when work began in 2016.
In his letter, O’Riley stated that BC Hydro has encountered some geotechnical and construction challenges on the project, and those challenges have meant the river won’t be diverted by September 2019.
If the September 2019 milestone is not met, river diversion must be delayed by one year, since it can occur only during a one-month window when river flow is at a low.
“Not meeting the current river diversion timeline has created new pressures on the project’s budget.
“We estimate that this development in the project is expected to increase its cost by 7.3% or CA$610mn, for a total forecast project cost of CA$8.945bn,” read the letter.
"While this will set some activities back a year, we had a one-year float built into our schedule and are confident we can still deliver this project on time, by November 2024."
Former B.C. Hydro CEO and President Marc Eliesen predicted Thursday that the project will be terminated, given this cost overrun early in the project and opposition.
Construction on the dam began in summer 2015, with an estimated CA$2.1bn expected to be spent by the end of 2017.
The NDP provincial government that took power in July has ordered a review to determine if the project should be completed or cancelled.
A cancellation or suspension would likely prompt a complicated path ahead—B.C. Hydro has roughly CA$4bn in contracts committed for the project, and has singed multi-million-dollar agreements with local governments in the Peace River Valley region for construction impacts.
O’Riley said in his letter that Hydro’s analysis “continues to confirm that completing Site C as planned is still the most cost-effective option for our customers.
“Suspending, or terminating and finding the power we need from other sources – which carries its own set of uncertainties – would cost billions more than completing Site C.”
The project, which was strongly supported by the previous B.C. Liberal government, has met some strong opposition in the Peace River Valley region, notably from farmers and indigenous groups who argue the project proponents failed to get informed consent before starting to build the dam.
The Wilderness Committee Campaign Director Joe Foy said the former Liberal government should have allowed the B.C. Utilities Commission to review the mega project, before B.C. Hydro began work.
Currently employing more than 2,000 people, Site C is the most expensive construction project in B.C. history and, if completed, will flood more than 100km of river valley, destroying farmland and First Nations spiritual sites.