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Power Struggle

Everything you want to know about the Site C dam — answered

You asked what B.C.'s most expensive public infrastructure project will cost, where the power will go, if anyone can stop it from getting built and more.

It’s been two months since we promised to dive deep into the Site C dam and asked what you want to know about the megaproject.

We’ve tackled the big questions: Is it past the point of no return? Why did the BC Liberal government block independent review of the project?

We also looked at what First Nations in the area are saying about the consultation process, whether or not B.C. needs the electricity and how Site C entered the murky world of political donations and lobbying. For our final piece we fact-checked some of the claims made about the project, looking for the truth about where energy from the project will go.  

These stories were driven by your questions, but you had a lot of other great questions too. Here's what we can tell you:

 

ON STOPPING SITE C

Are there legal options to stop the project?

Yes. How? A court would need to issue an injunction to stop the work. But so far, opponents have tried to make this happen without any luck. The Peace Valley Landowners Association filed a lawsuit challenging the project, and lost in September 2016. Three additional lawsuits, filed by the Prophet River and West Moberly First Nations over infringement of treaty rights, have also been dismissed, in 2015, 2016 and January of this year. A 2015 civil suit filed by the Blueberry River First Nations over cumulative impacts of industrial projects in their territory, which includes Site C, is ongoing.

Doesn’t failure to act on recommendations from the federal-provincial Joint Review Panel provide a legal basis to challenge the dam?

No. The Joint Review Panel recommendations were just that: recommendations. They are not legally binding.

Are we past the point of no return?

That’s a complicated question, which we tackled here.

 

ON UNDERSTANDING THE PROCESS

Were conditions placed on the project?

Yes, the project must comply with 150 legally binding federal and provincial conditions. So far, inspectors have found 11 violations of the conditions. Fines of up to $400,000 are possible, but BC Hydro is given time to address the infractions and avoid the fine. Infractions have related to water quality, fish habitat, amphibians, air quality, sediment in the river, invasive plant treatment, equipment leaks, on-site recycling and safety plans.

Who reviewed Site C?

There are two components to approval: environmental permits and a decision to proceed. The environmental permits were approved federally by former environment minister Leona Aglukkaq, and provincially by Environment Minister Mary Polak and Minister of Forests, Lands and Natural Resource Operations Steve Thompson. These approvals were given after considering the Joint Review Panel’s report.

Shortly after, the provincial government approved Site C and decided to go ahead with the project. Bill Bennett, former energy minister, and Christy Clark were the key people responsible for this approval.

Has there been a third-party environmental review?

Yes, by the Joint Review Panel, which had a core mandate of environmental review.

 

ON THE BUSINESS CASE

Will it provide cheaper power for British Columbians?

If you’re asking whether Site C will reduce rates, the answer is no. Site C’s power will cost BC Hydro between $83 and $95 per megawatt hour to produce. The average rate charged to British Columbians (for residential and industrial customers) is around $83. Site C has no firm buyers for the increased production, so electricity will likely be sold at spot market prices of $25 to $30 per megawatt hour — about a third the cost of production. The cost of building the dam will add $8.8 billion to BC Hydro’s $18-billion debt. With or without Site C, rates will need to increase at some point to start paying down the debt.

Is it true the cost of building the dam will not be recovered for 70 years?

BC Hydro has used a 70-year amortization period, which means it plans to repay the cost to lenders over 70 years. So BC Hydro is not expecting a profit from the dam until 2094. The dam is expected to last more than 100 years.

Will Site C’s energy be sold to LNG producers at a discount?

Industrial customers already pay a much lower rate than residential customers, because they generally provide their own transmission infrastructure. In 2013, the B.C. government announced it would charge an LNG-specific electricity rate of $83.02 per megawatt hour — higher than the reduced industrial rate. But, in November, the government cut that to $54.34. On top of that, LNG is also subsidized with low tax rates.

Does the $8.8-billion cost include transmission lines?

Transmission lines to hook Site C into the grid are included in project costs. Additional power lines to allow industry to access power from the dam are not. The province is trying to get federal support for new transmission lines to gas projects in the province’s northeast.

 

ON THE NEED FOR THE POWER

Who’s the power for?

The B.C. government and BC Hydro have said at various times the power will go to California, Alberta, LNG projects and gas extraction and residential users. The first three options don’t look promising. California is interested in small hydropower and other forms of renewable energy; the transmission lines to Alberta would be expensive and gas-fired power plants in that province would be cheaper; and only one small LNG plant has been approved. Residential demand is flat. So sales will likely go to the North American grid, selling at spot prices to the U.S. market.

We fact-checked what the major groups involved with the project have said about where the power would go. We found, for the first few years, sales of Site C's electricity would likely be at a loss.

How much electricity do we export now?

Last year, exports accounted for 10 per cent of BC Hydro revenue. The actual volume of energy exported was much higher, but BC Hydro charges higher prices in the province and sells power into the export market at much lower prices. The Crown corporation reports gross profits of 72 per cent on domestic sales and just 28 per cent on exports.

Doesn’t a growing population mean more demand for electricity?

B.C.’s population is expected to increase at around the same rate it has for 20 years — about 1 per cent a year. But despite the growth, provincial demand fell from 2004 to 2015. The flat demand is probably due to a combination of conservation technology and response to higher prices. In general, when prices rise, demand falls as people reduce consumption. Predictions of growing future demand are suspect.

 

ON BC HYDRO’S FINANCES

How much debt does Hydro have, and how will this project affect debt?

BC Hydro’s debt is $18 billion. Site C costs will push that to at least $26.8 billion.

How much will each British Columbian be on the hook to pay?

There are 4.7 million residents in B.C., so a straight cost per person is $1,852.

Why is there such a difference between residential rates and industrial/commercial rates?

Residential rates are the highest. The residential average rate is 10.6 cents per kilowatt hour, commercial customers pay 9.1 cents and the industrial average rate is 5.6 cents. BC Hydro manages the distribution of energy to households and most commercial customers. But industrial customers, who pay about half the residential rate, typically hook into a main hub and run their own transmission infrastructure, reducing costs for BC Hydro. The different rates are meant to reflect that.

 

ON THE POLITICS OF THE DAM

Where do the parties stand?

The Liberals are unequivocally in favour of Site C and committed to completing it. The NDP has called for the project to be sent to the BC Utilities Commission (BCUC) for review and have committed to doing this if elected. The Greens are opposed to the dam and have said they would cancel the project.

If NDP sends Site C to the BCUC, will construction stop during the review?

The NDP has not made a statement on this. It said the BCUC review would be focused on economic questions (a key area missed by the Joint Review Panel) and would be expedited.