The proposed Site C Dam has now received environmental assessment approval, which means the B.C. Liberal government will soon decide whether to greenlight its construction by BC Hydro.
Site C is a massive project. It will put B.C. taxpayers and BC Hydro ratepayers on the hook for a loan of at least $8 billion. Think about that number: Eight (8!) billion dollars would pay for light rail transit to Surrey, plus rapid transit along the Broadway corridor, plus upgrades to Highway 1 into the Fraser Valley, plus the McKenzie interchange in Victoria, and still leave a $1 billion infrastructure fund for projects in other communities across B.C.
Before the B.C. Liberal cabinet makes its decision, Treasury Board, holders of the provincial purse strings, will meet in secret with the Minister of Energy to decide whether to recommend borrowing the $8 billion for Site C. Here are excerpts from that loan interview:
Treasury Board Chair Mike de Jong: How much do we have to borrow for Site C?
Minister of Energy Bill Bennett: Roughly $8 to $10 billion.
de Jong: Well, is that $8 or is that $10 billion? Remember the 90 per cent cost overrun on BC Hydro's Northwest Transmission line?
Bennett: Well, it's not a sure thing. We haven't done an in-depth, independent analysis of costs, but KPMG says BC Hydro's cost estimation methods are sound - this time.
de Jong: There will be hell to pay if there are cost overruns.
Bennett: Site C can no more come in over $10 billion, than I can have a baby.
de Jong: Yah, that's been done before. So, what are loan payments on $8 billion? Electricity rates are already up 28 per cent over the next five years. And that's only because we intervened to keep them from going higher. Will you have to jack them up further to cover this debt?
Bennett: Well, I'm not completely sure. We thought we would let the B.C. Utilities Commission look into that after we start building Site C.
de Jong: So, you want to build Site C without knowing: how much it will cost; how much we need to borrow; or whether electricity rates will have to go up to pay for it?
Bennett: Ahhhh, it doesn't sound good when you say it like that, but yes I just have a good feeling about it.
de Jong: A good feeling!? What about our triple-A credit rating? Moody's has given us a negative outlook because of how much we've run up the provincial debt. How do we justify adding another 10 to 20 per cent? That's $4 to 5,000 for every family in B.C. Aren't there any alternatives?
Bennett: Well, Dan Potts, the former Executive Director of the BC Association of Major Power Customers, says that using natural gas-fired power would save up to $350 million a year in electricity costs. We would also save $6.6 billion in capital costs. The Clean Energy Association of B.C. and experts working for Treaty 8 First Nations say they also have alternatives that could save up to $1 billion.
de Jong: Back up! Are you saying that a $1.4-billion natural gas power plant like the Shepard facility in Calgary produces the same amount of power? That would leave $6.6 billion for other infrastructure projects across B.C. We could even buy carbon credits with the savings.
Bennett: Yes, but we can't be sure about any of this. The Clean Energy Act - the one that we passed - prohibited the federal/provincial Site C Joint Review Panel from exploring key options. And the B.C. Utilities Commission hasn't been given the authority or funding to do this research.
de Jong: Didn't the Joint Review Panel say we might not even need all this extra power? Why rush into this? Why not take the time to examine alternatives?
Trumpets: Premier Christy Clark enters the Treasury Board meeting.
de Jong: Good morning Premier Christy, we're discussing whether it makes sense to build Site C.
Premier Clark: You mean the Christy Clark dam? It's a no brainer. Build baby build.
- Rob Botterell is a Vancouver lawyer and former bank comptroller who recently made a presentation on the budget and debt implications of Site C to BC's select standing committee on Finance and Government Services. For more information see http://www.leg.bc.ca/cmt/finance/ or http://sitecquiz.com/
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