|Site C Hydro Project, B.C.
projects underway in British Columbia and Manitoba are making waves among
observers, all drawing parallels with the Muskrat Falls project. While there
are many similarities, the public should be careful in concluding that Muskrat is entirely
their mirror image.
inextricably tied to gung-ho engineers, compliant bureaucrats, and politicians unwilling
to subject self-serving assumptions and overbearing risk to professional and
objective review. This is bad enough, except Muskrat will be forever dogged by
the deceit that underscored project sanction.
back to that point, but others are also instructive.
populous (4.6 million), economically diversified, and wealthy province like
BC is capable of absorbing the waste of a few billion dollars — even if the very
notion is offensive. British Columbians are no less insulated from excesses of
populism, dogma, and unfettered hyperbole than any other place.
to the limitations of political rhetoric and a fast–changing American
electricity market, too.
Dam, situated on BC’s Peace River is a 1,100 MW facility, forecast to cost
$8.5 billion. Manitoba’s Keeyask
Dam/Bipole III TL is a $5.5 billion/695 MW project. In contrast, the $11.7
billion/824 MW Muskrat Falls project dwarfs the other two — just on the cost
per MW. Even the arithmetic comparison is premature because the Muskrat powerhouse
is only one-half complete and its efficiency remains under a cloud, Nalcor
having lost the legal right to enforce a Water Management Agreement.
three projects are in trouble is indisputable. Researchers at the University of
British Columbia (UBC) recently issued a report calling for the suspension of
Site C, arguing that current export prices would see the project report
cumulative losses of $2.7 billion by 2036.
UBC researchers state that Site C “isn’t
the most cost-efficient option for producing power anymore”. BC’s predicted
demand for electricity, they say, has “dropped significantly”.
with Muskrat is that electricity demand in this province will not reach MF
sanction level estimates until 2036.
center of Manitoba’s and BC’s problem is also the collapse of electricity
prices in the United States. The UBC authors state that the energy will be “exported
at prices currently far below cost”.
use if you got the juice” is a phrase that still resounds; Premier Dunderdale unmindful
that she had approved the giveaway to Nova Scotia while ignoring the low
returns forecast from a fiercely competitive New England electricity market.
|Keeyask Hydro Project, Manitoba
where normally sensible people went gaga clinging to Williams’ coattails, Manitoba
boasted their own flag wavers. Graham Lane, a former Manitoba PUB Chair, summed
up the Manitoba condition: “Ignoring major market changes and falling head over
heels for everything green and indigenous, the NDP pressured Hydro into
unneeded costly new infrastructure and pushed it to spend $1 billion plus to
buy northern First Nations agreements offering risk-less gold-plated
than those arrangements (Nalcor has its own Innu deal which has feathered the
nest of just a few Natives) Manitoba Hydro’s failure to examine the business
case for their project has led to the conclusion that even changing the transmission line – Bipole
III’s “circuitous, lengthy and enormously costly route” – will give the province
little respite from fierce competition in all directions.
“American utilities expect more below-cost power.” He adds: “Hydro now takes
$500 million a year more out of ratepayers’ pockets than before the expansion
began [and] if not courageously halted by the… government, ratepayers could end
up paying a further $1.5 billion annually to keep [Manitoba] Hydro solvent.”
getting the picture?
NL’s Muskrat Falls, BC’s Site C and Manitoba’s Keeyask Dam/Bipole III TL, is
the absence of a full regulatory review.
The NL government dismissed the thumbs
down given by the Lower Churchill Project Joint Panel, and permitted Nalcor to ignore
the PUB’s implicit warning in favour of approval from its own selection of paid
a panel — not the PUB — was given the job of reviewing various hydro projects.
It was required to treat prebuild expenses on Keeyask and a second project, Conawapa, as sunk costs.
the business case.
that a government that wants support and approval for even risky, and foolhardy,
public works projects will find a way.
overtaxed consumers will tire of slogging their guts out for a short-term
political purpose. Eventually they might see the value of oversight
institutions, like public utilities boards. But they will learn that lesson the
has been grossly mismanaged from day one, too.
massive problem — which Stan Marshall has failed to remedy — the similarities
between the Muskrat Falls project, Site C and Keeyask/Bipole III end. That is,
of course, with one other major exception.
BC and Manitoba projects were ill-advised, it is noteworthy that, unlike in the
case of Muskrat, no one has offered evidence that their sanction was a
consequence of the falsification of project estimates.
Falls, alone, carries that stain.
those words from Nalcor’s engineer who disclosed, in quite comprehensible and descriptive terms, the virus that had infected Muskrat. In a Piece entitled MUSKRAT: ALLEGATIONS OF PHONY COST ESTIMATES the engineer declared:
information anymore. To begin with, the original cost of
$6.2 billion on which the project was approved was a complete falsification.
The estimate was deliberately kept low — below $7 billion, so as to appear
favourable relative to the cost of thermal power generation.
three years ago, but Nalcor Management kept it a secret, steadfastly denying
that there were major schedule delays and cost overruns, until it was no longer
possible to hide the true status with the election of a new Provincial
finds itself in a position where the project has already exceeded the “fake”
estimate by $4.3 billion, including interest costs.
public is not in a state of rebellion is perplexing. It is a matter that will
be debated in the province for the next one hundred years.
reason for such deep-seated public passivity, the Muskrat Falls project will
forever stand as a beacon testifying to the wilful complicity of bureaucrats
and politicians, to secure the sanction that might otherwise be denied.
hear comparisons to Site C or Keeyask, I suggest that you not be too quick assess them
as merely having “Muskrat proportions”.