British Columbia's government said it will construct the Site C hydroelectric project even though costs have ballooned to C$10.7 billion, saying that the nearly C$4 billion cost to abandon the project is too high for taxpayers to bear.
Government-owned BC Hydro and Power Authority has revised the cost of the project upward from C$8.34 billion and an oversight board has been commissioned to insure costs will not increase again. British Columbia would have had to take on the project's C$3.9 billion in debt had it followed through on threats to stop the project, according to a Dec. 11 statement. The cost includes C$2.1 billion already spent on construction and C$1.8 billion in remediation costs.
Site C's fate came under review after a provincial election put the socialist New Democratic Party in control of the government. After campaigning on a platform to oppose Kinder Morgan Inc.'s Trans Mountain pipeline expansion and review Site C, a 1,098-MW power plant on the Peace River, the government had its energy regulator launch an investigation into the need for and cost of Site C.
"Megaproject mismanagement by the old government has left [British Columbia] in a terrible situation," Premier John Horgan said in the statement. "But we cannot punish British Columbians for those mistakes, and we can't change the past. We can only make the best decision for the future. It's clear that Site C should never have been started. But to cancel it would add billions to the province's debt."
The decision to proceed drives a wedge in the coalition government that runs the province. Horgan's party has a slim majority in the provincial legislature through an alliance with the Green Party, which holds the balance of power. Green leader Andrew Weaver expressed disappointment with the plan to proceed. If the Greens split with the government it could trigger new elections in the province.
"Our caucus is extremely disheartened by this decision," Weaver said in a separate statement posted on the Green Party website. "It is fiscally reckless to continue with Site C and my colleagues and I did everything we could to make this clear to the government."
The British Columbia Utilities Commission said the cost of developing alternative non-emitting energy sources would be higher than completing Site C, although per-unit energy costs would be lower. The project was proposed when the government anticipated the development of more than a dozen large LNG facilities on the province's northern coast. So far none of the large projects proposed has been approved, while two smaller projects on the southern coast have progressed. In its report, the British Columbia Utilities Commission offered no recommendation on whether or not the project should go ahead.
"The old government recklessly pushed Site C past the point of no return, committing billions of dollars to this project without appropriate planning and oversight," Horgan said in the government statement. "Our job now is to make the best of a bad deal and do everything possible to turn Site C into a positive contributor to our energy future."
