Editor The Times:
The sub-headline in a Dec. 12 story in KTW on the Site C decision is inaccurate (‘Premier Horgan cites $4 billion already spent’).
According to a provincial government news release on this matter, $2.1 billion has been spent and another $1.8 billion in remediation costs is expected. But even these numbers are misleading. In the BC Utilities Commission review of Site C, BC Hydro submitted that $2.1 billion will have been spent on the project by Dec. 31, 2017.
However, BC Hydro estimated termination and remediation costs would be approximately $1.1 billion, for a total potential shut-down cost of $3.2 billion. The utilities commission Site C review panel generally agreed with BC Hydro’s estimates, although it concluded the figure could be higher or lower depending on the cost of the energy alternatives to Site C.
The uncertainties surrounding Site C’s shutdown costs are critical. But the biggest uncertainty is whether there will be enough buyers of this large block of electricity that Site C will generate. As the KTW article states: “Horgan said sale of electricity produced when the dam is operating will provide revenue to offset construction costs.”
When Site C becomes operational in 2025, it will take years for BC Hydro’s customer base to fully utilize this new power. In the past year, BC Hydro’s ratepayers paid an average of nine cents per kilowatt hour to BC Hydro, while the Crown corporation sold its surplus power, mostly to the United States, for 3.4 cents per kilowatt hour.
And according to BC Hydro’s 2017 annual service plan report, BC Hydro sold the equivalent of 36,041 gigawatt hours of electricity and gas to non-ratepayer customers, which is the equivalent of just more than seven times the power Site C would generate.
Even if BC Hydro receives the average price of 6.2 cents per kilowatt hour that it sells all of its power for, the 5,100 gigawatts of power Site C would generate annually would provide an annual revenue stream of only $316 million for an investment that is now estimated to cost $10.6 billion (and, given the cost overruns on past BC Hydro projects, will likely be much higher).
This revenue may not even cover interest charges.
Sadly, the utilities commission’s review of Site C noted many less financially and environmentally risky alternatives to Site C power; alternatives the rest of the world is adopting at a rapid pace.
While it was the B.C. Liberals who created this financial mess in the first place, the B.C. NDP government has now decided to spend another $7.4 billion on a project that no private-sector company would even consider, given the financial risks.
In this respect, both old-line political parties have shown a callous disregard for the taxpayer, who in the final analysis is responsible for the debt that is piling up on BC Hydro’s books.