-----

Resources



Market News

 December 17, 2014
B.C. government approves Site C dam

 The B.C. government pledged Tuesday to spend billions building a big new dam in the northeast, setting the stage for a courtroom showdown with furious First Nations and other landowners over the most-expensive project in the government's history.

Premier Christy Clark approved the Site C dam, saying the almost-$8.8 billion megaproject will provide future generations with clean, reliable hydroelectricity, like that already generated by other dams on the Peace and Columbia rivers.

"In the life of any province, there are moments where each of us have an opportunity, a responsibility, to make big decisions, ones that are going to matter, in this case, for a century," Clark said at the legislature. "Today is that day."

It would be BC Hydro's first new dam in more than 30 years, and likely the last major hydroelectric project of its kind on the Peace River. It would put the BC Hydro back into the business of generating its own power after years of increasing reliance upon small-scale private power projects.

Energy Minister Bill Bennett said Site C will provide cheap, reliable power to help meet a demand for electricity that's expected to jump 40 per cent in the next 20 years.

But, the dam would flood 5,557 hectares of land along 83 kilometres of the Peace River valley, from Fort St. John to Hudson's Hope, destroying traditional territory of local First Nations and displacing residents who live and farm in the area.

Both aboriginal leaders and farmers have challenged the project in court. On Tuesday, they slammed the provincial government for charging ahead.

First Nations chiefs called the move "ill-advised and incredibly stupid," and doomed to failure.

"The fight is just getting started," said Chief Roland Willson of the West Moberly First Nation.

He said First Nations will be seeking injunctions to prevent permits from being granted and construction starting until legal challenges have been concluded.

Willson added the Yes decision on Site C puts all types of resource development under scrutiny for First Nations, including natural gas extraction in northeast B.C. needed to fuel billions of dollars in proposed liquefied natural gas (LNG) export plants on the B.C. coast.

"There's already a massive footprint on the land up here. Now, there's another large-scale hydroelectric dam. ... We've got to do what we can to protect our way of life up here," said Willson. "We are not just going to roll over and allow the systematic destruction of our lands anymore."

The Doig River, Prophet River, West Moberly and McLeod Lake bands --- all members of the Treaty 8 Tribal Association --- have already launched a Federal Court action seeking to quash Ottawa's environmental approval of the project.

University of BC. professor Elizabeth Edinger said that because claims of First Nations cover much of British Columbia, it's hard to develop natural resource and industrial projects without proper consultation, which is required by law.

Edinger, an expert in constitutional law, said she could not speak to the merits of the legal challenges but said "they have some chance of, if not success, at least procrastination (delaying the project)."

The Peace Valley Landowners Association expects to be in B.C. Supreme Court in April.

"Now the legal action starts," said Ken Boon, president of the association. "We would expect that they won't start construction until the outcome of those court cases is decided, but we'll see about that."

The government provided little detail Tuesday on how it plans to mollify critics, instead saying it hopes to convince First Nations of the economic benefits of the dam while working with affected landowners. Mitigation and compensation funds are in the budget, but the government refused to provide the exact amounts.

Energy Minister Bill Bennett focused on the positives of the project, saying it will generate 1,100 megawatts, enough electricity to power 450,000 homes, with an operational lifespan of more than 100 years.

"What has driven me as the energy minister over this last year and half is what's best for the ratepayer of British Columbia, how can we acquire the power we need at the least cost possible? And the answer turned out to be the Site C project."

Site C's costs have already risen almost $875 million above the $7.9 billion forecast made 2010. Bennett blamed a six-month delay in construction, the reversion from the harmonized sales tax to the provincial sales tax, and the creation of a $440 million "project reserve" fund for unexpected costs.

B.C. has some of the lowest residential and commercial electricity rates in North America, but it needs Site C to continue that "competitive advantage," said Bennett.

"It's big, it's expensive, it's a huge project, but it's eight per cent of the total electricity needs required in the province," said Bennett.

Taxpayers will see little immediate change on their Hydro bill.

The government's plan to raise residential power rates as much as 28 per cent in the next five years remains unchanged by Site C, because recovery of the dam's costs won't start until construction is finished in 2024.

A joint environmental review panel in May concluded Site C was the best and cheapest alternative for new energy in B.C., but also warned of significant environmental impacts and cautioned that BC Hydro hadn't adequately proven the project should proceed at this time.

The choice for Site C pushed B.C. further away from independent power projects, which had promised to generate similar power output as the new dam using several small-scale projects, such as wind, run of river, geothermal and solar.

The smaller private projects promised less risk, less debt and less environmental impact, but also required B.C. to sign multi-year power purchasing contracts.

Site C has a "unique advantage" in being the third dam on the Peace River, because it can reuse the water from the existing W.A.C. Bennett Dam's much larger reservoir.

"It puts Site C in a position, from a competitive view, that it is next to impossible for any other option to compete with it," said Bennett.

There's still a role for independent power projects to augment B.C.'s power grid, he said.

Clean Energy BC executive director Paul Kariya said his industry is disappointed but hopes it can provide additional private power to the province in the future.

Opposition NDP leader John Horgan said the government should have better investigated the merits of small-scale private power projects and asked the BC Utilities Commission to properly compare that approach with Site C.

"Hydro has been told they can only build Site C ... but no one has done the math," said Horgan.

The government had previously exempted Site C from review by the utilities commission.

BC Hydro currently generates more than 43,000 gigawatt hours of electricity each year for 1.9 million residential, commercial and industrial customers. Almost 90 per cent of the Crown corporation's electricity comes from hydroelectric facilities.