Site C project cost rises $610 million

BC Hydro has filed an information response to the British Columbia Utilities Commission in regards to the ongoing inquiry to determine the future of the Site C Clean Energy Project.

The letter, sent by BC Hydro president and CEO Chris O’Riley, includes a note that the cost of the project has now risen $610 million because the project will no longer be able to meet the 2019 timeline for the river diversion.

Here is the letter in full, which was formally addressed to Patrick Wruck, commission secretary and manager, regulatory support, for the B.C. Utilities Commission:

“I write to submit further BC Hydro responses to the questions set out in the British Columbia Utilities Commission’s Preliminary Report issued on September 20, 2017.

It has been very important to us in this process to be forthcoming with timely and accurate information. Today’s filing provides an opportunity for us to share new information with the Commission and the public.

Like all large, complex projects, Site C faces risks and uncertainties. In our quarterly progress reports to the Commission and in our August 30, 2017 filing, we identified risks that could result in greater cost pressures for the project, including risks to the river diversion timeline. Deloitte identified those same risks in the report it delivered on September 8, 2017.

BC Hydro has encountered some geotechnical and construction challenges on the project and the risk to the river diversion timeline has now materialized. Based on the recent completion of a constructability review and an executive meeting with our Main Civil Works contractor on September 27, 2017, we have now determined that we will not be able to meet the current timeline for river diversion in 2019. While this will set some activities back a year, we had a one-year float built into our schedule and are confident we can still deliver this project on time, by November 2024.

Not meeting the current river diversion timeline has created new pressures on the project’s budget. We estimate that this development in the project is expected to increase its cost by 7.3 per cent or $610 million, for a total forecast project cost of $8.945 billion. We’ve retained the contingency and it remains available to prudently manage risks on the project.

Due to the project’s complexity, we expect to continue to face risks in other areas, including our second largest procurement (i.e. the Generating Station and Spillway) that remains open and the highway realignment. We will work to mitigate those challenges.

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.

We work every day to ensure that we are acting in the best interest of our customers. We remain committed to Site C and are confident in our ability to deliver the project. Site C continues to be the best option to provide a long-term supply of low cost, clean energy to British Columbians.

I will be at the Technical Panel Session on October 14, 2017, along with other BC Hydro subject matter experts, to answer the Commission Panel’s questions on this submission or any other matters to assist the Commission in its final report in this Inquiry.”

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