Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

The Site C Decision

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Site C Construction July 2017 2

De Smog Canada image of Site C Construction

As I am sure most of you know, I think John Horgan has made a huge mistake. But this article in MacLeans comes to the opposite conclusion. So go read that then come back here, and I will tell you why Blake Shaffer is wrong.

OK he starts off on the right foot

Regardless of the decision, B.C. Hydro has spent $2.1 billion on the project that it cannot get back. It’s sunk. It’s irrelevant.

But then he conducts his analysis in terms of cost. And he picks the wrong conclusion from the right data. Cost overruns will quickly make this project uneconomic. That seems to me to be inevitable. It is well documented that transportation projects always seem to cost far more than anyone expected. And that applies to major infrastructure projects in general and very large hydro dams in particular.

If $10.7 billion becomes $12 billion, completing Site C becomes questionable.

It’s not “if” it is “when” – and based on the track record of this project so far, that will be sooner rather than later – although I also confidently expect that, also based on experience to date, that information will be obfuscated, withheld and even outright lied about.

There is only one brief paragraph about First Nations – and that seems to me to send a signal too. As though these concerns are somehow minor, just to be expected and easy to get around. I think he is wrong about that. It is one of those things where you cannot be relatively decent. You are either committed to improving relations or not. This is not something to be treated lightly. The track record of governments’ treatment of indigenous people in Canada is shameful. Sadly this simply continues in the same pattern and calling the dam “Reconciliation” instead of “Site C” is simply PR fluff. The BC government is going to find itself in court, once again, with the West Moberly First Nation. Nothing has changed. 3.5 million Google references to “west moberly first nations v. british columbia”.

the cost of alternative technologies will decrease – a reasonable stance, given history – then termination can be justified

No shit, Sherlock. The recent history of wind, solar and battery technology (just to name one of many storage options) has been declining cost. And it has always been true that investing more in conservation – better energy efficiency or “demand-side management” – was always cheaper than new build generation. That was true when I first came to BC to work in the Energy Efficiency Branch (of sacred memory) and is still true now.

But then the analysis stops. What, they ran out of space in the magazine? Because there is no mention of opportunity cost. Flooding the Peace River valley means you lose the ability to grow food there. There aren’t many in places in BC where you can grow fruit and vegetables. And with climate change we already know that we have lost the present source of much of those. California is where it came from up to now. In future, who knows. Not northern BC that’s for sure. And given that we know we have to adapt to climate change and become much more local in our focus if we are going to have a sustainable life style, that does not depend on air freight and trucking  – both heavily dependent on fossil fuels right now and having a hard time changing – losing the ability to grow our own food close to home might at least get a mention don’t you think?

POSTSCRIPT

Screen Shot 2017-12-13 at 1.09.02 PM

And here is a working version of that link for the doubters

ALSO read this article in De Smog blog about how the media failed to report this story all along the way.

And this piece in the Times Colonist by Marc Eliesen who 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. He says Horgan’s reasons are “utter nonsense”.

Furthermore, three experts state that the NDP can’t even do the basic math properly

Eoin Finn, a retired partner of KPMG, one of the world’s largest auditing firms, U.S. energy economist Robert McCullough and Harry Swain, a retired bank president with expertise in project financing,

and here are some choice quotes

“This is the stupidest capital decision ever made by a B.C. premier. I don’t know who is giving them accounting advice.” [Finn]

What’s appalling about this is that Cabinet has been advised by some people who simply don’t understand how the finance system works,” said Swain, the former CEO of Hambros Canada Inc. and a former board member of Hambros Bank Ltd. of London.

McCullough, whose testimony to a U.S. Senate Committee helped spark the criminal investigation into Enron, said recovery of an energy project’s termination cost is “a very common practice in the utility business and is addressed in every utility’s annual report.”

McCullough also pointed out that B.C.’s triple A credit rating has just been confirmed.

AND SOME MORE NEWS (January 11, 2018)

Manitoba Hydro is now not only facing cost overruns on its huge dam project but also a dramatic drop in demand for power due to the cancellation of the Energy East pipeline.

And here is Charlie Smith in the Straight: “it’s still irredeemably terrible public policy”.

And now Seth Klein from Policy Note (January 17, 2018)

It seems at this point that the prospects of an about-face are highly unlikely. So why bother rehashing the decision?

First, it is important that unconvincing economic justifications—and the fear-mongering of credit rating downgrades—be challenged, otherwise the precedent is set for more disheartening decisions down the road.

Second, understanding this decision matters so that the new government can be encouraged to approach future ones differently. Much progress is clearly still needed to truly implement and operationalize UNDRIP in BC policy-making. And this is an opportunity to change the frame, to shift whose expertise wields authority and to reconsider what priorities win out.

In the last election British Columbian voted for change. Rather than deferring to the same accountants and ministry officials, this still new-ish government can continue to bring in new voices, invite more creative solutions and engage more fully with civil society.

 

Written by Stephen Rees

December 12, 2017 at 5:56 pm

Posted in energy, Environment

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2 Responses

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  1. You may not post comments on this blog without a valid email address

    r

    December 12, 2017 at 8:16 pm

  2. “Meet the new boss.

    …Same as the old boss.”

    Written by Pete Townsend.

    Don

    December 26, 2017 at 9:09 pm


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