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B.C. Hydro says Site C dam benefits understated

B.C. Hydro says the report into the Site C project by the B.C. Utilities Commission underestimated the hydroelectric dam’s benefits by $800 million. In a letter to the commission released Thursday, B.C.
Photo - B.C. Hydro - generic
B.C. Hydro headquarters in Vancouver.

B.C. Hydro says the report into the Site C project by the B.C. Utilities Commission underestimated the hydroelectric dam’s benefits by $800 million.

In a letter to the commission released Thursday, B.C. Hydro argued the independent regulator made mistakes in two models that compared Site C to a portfolio of alternative energy options.

“B.C. Hydro performed a preliminary analysis of these two models and has identified what appear to be calculation and input errors,” B.C. Hydro wrote in the letter.

“The cumulative effect of these errors is to understate the benefits of completing Site C, as compared to the commission’s ‘illustrative alternative portfolio,’ by approximately $800 million.”

B.C. Hydro’s six-page letter detailed what it argued was an incorrect discount rate on Site C’s surplus, inconsistent inflation rates, and inaccurate treatment of some of the project’s costs, among other technical issues.

One of the errors has been admitted by the utilities commission, which said last week it had incorrectly calculated $336 million in discount rates for Site C’s surplus.

The commission report said that alternative energy sources such as wind and geothermal, combined with an aggressive plan to reduce residential and industrial power consumption, could provide similar energy for “equal or lower unit energy cost” than the $8.3-billion dam.

However, B.C. Hydro’s argument, as well as the utilities commission’s error, could tilt the financial advantage back to Site C.

“The information that we need and our decision-making process has to be clear,” Energy Minister Michelle Mungall said when asked whether the reported errors undermine her government’s confidence in the utilities commission.

“There can’t be any vagueness at all. This is a major decision that will be impacting British Columbians today and into the future.”

The utilities commission report on Site C, completed within 12 weeks at the government’s request, concluded that the project was neither on time nor on budget. The final decision on whether to cancel the project is to be made by the NDP cabinet by the end of the year.

Mungall said she thinks the utilities commission “did a very good job in the time frame that they had.”

Two government ministers also raised concerns and questions about the commission calculations in a letter last week.

The commission responded Thursday, confirming that the increase to B.C. Hydro rates, if Site C were to be terminated, would be at least 10 per cent — assuming the corporation had to pay off almost $4 billion if the dam project was stopped.

The commission’s letter to the government confirmed it did not use the $2.1 billion already spent on the dam, along with the estimated $1.8 billion to remediate the land, when comparing the cost of cancelling the project and obtaining energy from alternative sources for almost the same cost.

Also Thursday, Premier John Horgan’s office announced six outside energy consultants have been chosen to present information to cabinet before the decision about the dam.

They are David Austin of the Clean Energy Association of B.C.; David Craig of Consolidated Management Consultants; Colleen Giroux-Schmidt of Innergex Renewable Energy; Mark Jaccard of Simon Fraser University; Robert McCullough, a researcher who has produced reports for the Peace Valley Landowner Association, and Karen Tam Wu of the Pembina Institute.

The six consultants will make a presentation to cabinet as a group on Nov. 30.