New energy expert analysis shows BC Utilities Commission report on BC Hydro Site C dam is fundamentally flawed

Date: 
Wednesday, November 15, 2017

A new analysis by a veteran energy expert shows that the BC Utilities Commission’s final report on BC Hydro’s Site C dam is fundamentally flawed and has made up to a $3 billion error on the “sunk costs” already invested in the project, leading to faulty conclusions about the viability of Site C to provide clean, green hydroelectric power for 100 years.

The analysis by Lorne Sivertson, former CEO of Columbia Power Corporation, strongly argues that the BC government should go ahead with Site C. And it shows that the BC Utilities Commission effectively ignored up to $3 billion in “sunk costs” of Site C – money already invested in construction to date – leading to serious errors that could wrongly lead to its cancellation.

“That ‘sunk costs’ don’t simply disappear as the BCUC wrongly says – it is a significant investment in Site C that must be considered when the BC government makes its decision on the project,” said Sivertson, also a former senior vice-president of a major bank and former BC assistant deputy minister of energy and finance.

Expert energy lawyer Jim Quail agrees, saying that whatever the final project costs, the total cost of starting the project, then scrapping it, then sourcing power from other resources includes the “sunk costs” that you add into following that option to completion. The public will bear that cost in either scenario. It will not simply disappear if Site C is abandoned.”

“Lorne Sivertson’s analysis provides a significantly different understanding of Site C and why the government should proceed with the project based on a rational, factual and sound economic understanding of where we now stand,” Quail said. “While we can all agree that the BC Liberal government was incredibly reckless in not putting Site C to a full review by the BC Utilities Commission years before construction started and letting all interested parties submit evidence for consideration, the province now has to decide how best to proceed with the funding already invested.”

The disappearing “sunk cost” is far from the only error found in the Sivertson and Associates Report that was commissioned by the Allied Hydro Council of BC. Sivertson also says that – contrary to the BCUC report:

• BC Hydro’s load growth estimate of future electricity needs is reasonable – and that if demand grows by just 1% per year from 2017 through 2036 – the equivalent of three Site C dams will be needed; and also in order to meet BC and Canadian green house gas emission reduction commitments;

• If the demand for electric vehicles continues to grow as rapidly as recent statistics show, even BC Hydro’s growth forecast will be low;

• The BCUC claim that alternative energy sources will have similar benefits and cost the same or less than Site C is not realistic. Alternative supplies are unreliable, particularly given there are no commercial solar power or geothermal power facilities in BC;

• The BCUC is wrong in saying that any surplus Site C power could not be exported to Alberta or the United States for a profit;

• The Columbia River Treaty Downstream Benefits cannot be considered as a reliable alternative to Site C as they are subject to complex international negotiations and can be revoked on notice;

• Project labour agreements as used successfully by BC Premier W.A.C. Bennett on the BCH Heritage Dams and all major dam construction since would greatly assist BC Hydro in completing Site C on schedule;

• While First Nations and environmental concerns are legitimate and should be further addressed to gain support, no Canadian law or Supreme Court decision gives First Nations a veto over resource projects; and that BC Hydro has undertaken exhaustive environmental permitting and First Nations consultations;

• And contrary to opponents’ claims, BC Hydro’s growth projections are not dependent on the development of a liquefied natural gas industry, nor is Site C power predicated on the needs of an LNG industry.

Allied Hydro Council of B.C. Business Representative Wayne Peppard says that Sivertson’s report is an essential analysis for government to consider as it makes a landmark decision by the end of the year that will have repercussions for decades to come.

“It is critical that the BC government consider all the relevant information about Site C before deciding – not to simply accept what are clearly fundamental errors made by the BC Utilities Commission in its final report,” Peppard says.

“Lorne Sivertson brings decades of experience and knowledge to his analysis of Site C and the BCUC report – we are asking the BC government to consider all the facts he presents before making a monumental decision that this province cannot afford to get wrong,” Peppard said.

Peppard notes that the Allied Hydro Council of B.C. has nearly 60 years of dam building experience representing construction workers who built the province’s extremely successful hydroelectric power system – and wants to help make Site C yet another successful dam project with a century of benefits ahead.

“It’s obvious to British Columbians that our province will need more clean, green hydroelectric power in the next 100 years as we move to eliminate the use of fossil fuels, fight climate change and grow our economy – Site C can be a huge factor in a better future,” Peppard said.

The Sivertson and Associates Response to the BCUC Final Report is available online at www.bcbuildingtrades.org

For More Information: 

Wayne Peppard at 778-386-5006 or Bill Tieleman, West Star Communications, cell 778-896-0964 or office 604-844-7827

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AHC Site C BCUC Response.pdf189 KB

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