Premier John Horgan had an opportunity to protect British Columbians from a huge financial burden. He failed to do so. Instead, on Monday he announced that his government would complete construction of Site C.
Continuing with Site C is a bad decision on so many levels. What’s worse is how low Horgan had to stoop to try to rationalize it. He engaged in irresponsible fear-mongering, the logic of which does not stand up under scrutiny.
Horgan claims that “to cancel [Site C] would add billions to the province’s debt — putting at risk our ability to deliver housing, child care, schools and hospitals for families across B.C. And that’s a price we’re not willing to pay.”
What utter nonsense.
The cost of cancelling Site C can readily be managed without affecting the provincial budget or imposing price hikes on ratepayers. Even Horgan’s briefing notes explain that the $4-billion cost of cancelling the project and remediating the site can be written off in B.C. Hydro’s accounts over 70 years — as it should be. There would be no rate shocks, increased burden on the province’s debt or negative impact on social programs.
Horgan’s unsupported rationalization for continuing Site C rings even more hollow when compared with his government’s explanation of how readily a onetime accommodation of $3.5 billion was absorbed into the provincial accounts when Port Mann Bridge tolls were eliminated. There was no warning that this debt might crowd out the government’s ability to borrow for important social infrastructure or lead to a credit-rating downgrade. Just the opposite.
Budget 2017, released in September, states that despite “this $3.5-billion onetime shift … taxpayer-supported debt-to-GDP ratio remains relatively low.” B.C.’s debt to GDP ratio is the third lowest among provinces in Canada.
If Horgan were really concerned about the financial impact of Site C on taxpayers and ratepayers, as he says he is, he would have cancelled the project. He had all the information he needed in the report prepared by the independent regulator — the B.C. Utilities Commission. Any reading of the commission’s work confirms that, based on economics and finance, Site C should be terminated.
The commission was not convinced that B.C. needs the electricity from Site C over the time horizon forecasted, and further indicated that even if we did, there are renewable alternative-energy supplies that are less expensive and more effective than Site C.
Site C is only two years into a nine-year project. The commission determined that costs had already escalated so dramatically that the project is no longer on budget or on schedule. In Horgan’s announcement, we learn that costs have further escalated by almost $1 billion. Project costs are $10.7 billion, up from the $8.7 billion when the project was announced in 2014.
Site C’s construction schedule and budget are following in the footsteps of Muskrat Falls in Newfoundland and Labrador. A judicial inquiry has recently been established to look into that boondoggle.
British Columbians have to be aware that this decision to go forward is much more expensive than a decision to stop the project and book the losses. There will be higher hydro-rate increases in the future by continuing construction than by terminating the project today.
Despite Horgan’s rhetoric, Site C is not beyond the point of no return. Horgan will rue the day he did not stop this madness when he had the chance.
Marc Eliesen is the former president and CEO of B.C. Hydro. He was an expert intervener in the BCUC Site C inquiry, and has served in executive positions throughout the energy sector in Canada, including chairman/CEO of Ontario Hydro and chairman of Manitoba Hydro.