Although Site C is two years and almost $2-billion into construction, the NDP government that took power in July has ordered a review to determine if the project should be completed or cancelled.
The Site C hydroelectric dam project will cost an extra $610-million because it will not meet the construction deadline to divert the Peace River in 2019, the head of BC Hydro says.
The revelation was made as the Crown corporation's $8.8-billion megaproject is undergoing an independent review by the B.C. Utilities Commission (BCUC).
Although the project is two years and almost $2-billion into construction, the NDP government that took power in July has ordered a review to determine if the project should be completed or cancelled.
An interim report from the BCUC last month identified key information gaps and cast doubt on many of the core assumptions that BC Hydro made to justify the project. This week, BC Hydro president Chris O'Riley responded to the commission, taking the "opportunity for us to share new information" about emerging troubles.
"Like all large, complex projects, Site C faces risks and uncertainties," he wrote. "BC Hydro has encountered some geo-technical and construction challenges on the project and the risk to the river diversion timeline has now materialized." A tension crack opened up on the north bank of the river in February, and has continued to defy repair efforts.
Mr. O'Riley said the overall project should still be completed on time, in 2024, but the delay in diverting the river will cost an estimated $610-million, which should be covered by the contingency fund.
However, the BCUC has already flagged concerns that the contingency fund is being drained at an alarming rate, given that the project is not one-quarter complete.
Energy Minister Michelle Mungall told reporters on Thursday her government's insistence on a review of the project is paying off because it has forced the Crown to make such disclosures.
"British Columbians had questions about BC Hydro's plans for Site C and we wanted to make sure they had answers," she said. "That's what this process is all about with the B.C. Utilities Commission."
She said the delay is not attributed to her government's actions. The NDP asked BC Hydro to delay construction of a highway diversion that would have led to the evictions of two ranching families. "We found when we became government that we could mitigate that so people could stay in their homes until this process is over," she said.
"What has caused this delay is the tension crack that started earlier this spring, it has grown since that time, and it has been a real issue for their engineers."
The government is waiting for a final report from the BCUC, due Nov. 1, before deciding what to do about the project.
In its interim report, the BCUC's review panel noted that BC Hydro underestimated the cost of the winning bid for the main civil works contract. "Should it have underestimated the cost of the two other major contracts still to be awarded … there may not be sufficient budget contingency remaining."
BC Hydro, in its response to the interim report, acknowledged those negotiations for the next major contract remain a challenge.
"Due to the project's complexity, we expect to continue to face risks in other areas, including our second-largest procurement [the generating station and spillway] that remains open and the highway realignment. We will work to mitigate those challenges," Mr. O'Riley wrote.
"Despite the challenges we have encountered and the risks that remain, our analysis continues to confirm that completing Site C as planned is still the most cost-effective option for our customers. Suspending, or terminating and finding the power we need from other sources – which carries its own set of uncertainties – would cost billions more than completing Site C."
BC Hydro executives will appear before the commission's review panel on Oct. 14 to defend the project and answer questions.
Justine Hunter