UPDATE – 2:30 PM PST: The BC Liberal government has approved Site C Dam, with construction tabled to start this summer.
Even if the BC Liberal government decides today to approve the now $8.5 billion Site C dam, the project still faces some big legal hurdles – based on mistakes the government made following the environmental review process.
In a nutshell, Site C faces six lawsuits from three different groups – each bringing both provincial and federal challenges. The plaintiffs include Alberta First Nations, BC First Nations and the Peace Valley Landowners’ Association (PVLA). Each case boils down to two main issues that linger from the Joint Review Panel’s indecisive verdict on the project earlier this year.
The first issue is the fact that the need for the project has still not been demonstrated. The second is the lack of fiscal due diligence surrounding the project.
Rob Botterell, former Comptroller for TD Bank in BC and the lead lawyer representing the landowners, reminds taxpayers, “At $8.5 Billion+, this would be the largest public infrastructure expenditure in the history of the province – the equivalent of 19 fast ferries.”
Independent regulator had its hands tied
Botterell’s case is built partly on the fact that the Liberal Government excluded the public’s independent energy watchdog, the BC Utilities Commission, from reviewing the project. The regulator was built precisely for this purpose: to examine proposed energy projects and plans based on their need and value to taxpayers and ratepayers.
The fact that the regulator was deliberately barred from doing its job on Site C constitutes gross political interference which may be legally actionable, in Botterell’s view. In a release prior to today’s announcement on the project, he noted:
[quote]Public infrastructure decisions of the size and scope of Site C…require the most thorough public scrutiny. It is simply unacceptable to make such decisions behind closed doors, release limited explanatory information, and conduct public policy by news conference sound bite. For the largest public infrastructure decision in provincial history we deserve better: open, transparent, and unfettered review of Site C’s economics by the independent and expert BC Utilities Commission.[/quote]
Botterell’s clients, a group of landowners in the Peace River Valley – some 30,000 acres of which would be flooded or disrupted by the project – have been granted a hearing at the BC Supreme Court on April 20. They will be seeking a Judicial Review that quashes the government’s issuance of the environmental certificate for Site C in October.
The PVLA is alleging that Cabinet erred in dismissing key portions of the Joint Review Panel’s findings on the project. While the JRP neither recommended nor argued against Site C, it found some gaping holes in the case for the project, which the government has thus far completely ignored.
BC govt breaks its own rules, gets sued
According to a legal backgrounder on the PVLA’s case, these issues include the overall need for the project – which was not demonstrated throughout the hearings – and the “uncertain economic effects of the Site C Project, including the Project cost, Site C electricity costs, and revenue requirements for the Project.”
This is the crux of the case: According to the PVLA’s legal petition, in ignoring these key findings from the panel, the government violated the very rules that it laid out in the terms of reference for the Site C review.
[quote]The Ministers relied upon a referral package from the Environmental Assessment Office that declared several key Panel recommendations to be beyond the scope of the Panel’s mandate. The PVLA Petition is based on a thorough review of the documents which set the scope of the Panel’s mandate, and which reveal that the Panel was not only permitted but was expressly required to assess the very economic impacts of the Project that were the subject of the recommendations the Ministers failed to consider. (emphasis added)[/quote]
In other words, the Liberal government set the rules for the review process, then broke them as soon as they became inconvenient. Project cost and need are no mere trivial matters and to cast them aside and proceed with Site C is highly irresponsible – and possibly illegal, according to this suit.
“The Ministers were not permitted under the Environmental Assessment Act to ignore the Panel’s findings and recommendations about the significant problems and uncertainties relating to Project and electricity cost estimates, load-forecasts, and valuation of alternatives for the Project,” say the plaintiffs.
And these are far from the only warning signs that should compel the government to halt the project or defer its decision.
Project’s cost keeps climbing
For starters, there’s the almost billion-dollar increase to the project’s sticker price leading up to the government’s announcement – now up to $8.775 Billion, making it the most expensive capital project in BC history. This from a government with a long track record of doubling initial estimates on much smaller capital projects – far, far worse than the NDP’s fiscal record in the 90s.
With dams particularly notorious for going over budget, there is no reason to expect Site C not to balloon further in cost.
BC’s credit rating in jeopardy
This would be compounded if Site C cost BC its Triple-A credit rating – a justifiable fear only made more real by Finance Minister Mike de Jong’s last-minute trip to meet with ratings agencies in Toronto on the eve of this announcement.
A lower credit rating means a higher cost of borrowing, hence a more costly dam – not to mention other fiscal challenges across the board. This last-minute trip by de Jong also begs the question: If you’ve already made the decision to proceed with Site C, then why go to Toronto now; if you haven’t, then why not leave more time to carefully contemplate your findings before rushing to announce your decision?
With soaring debt at BC Hydro, plus over $100 Billion in hidden taxpayer obligations (from private power contracts, public-private-partnership deals and the like) and close to $70 Billion in conventional provincial debt, BC’s credit rating should be in jeopardy.
Remember, when the NDP left power in the early 2000s, our provincial debt was a mere $34 billion, with none of these extra costs. Pile on Site C Dam, plus these hidden obligations – which are debt by another name – and the Liberals will have raised the real burden to BC taxpayers by over 5 fold since coming to power!
Already, we’ve seen skyrocketing power bills in recent years – which we can only expect to intensify if Site C proceeds.
No need for Site C
This will be compounded by the lack of need for the project, as we learned throughout the JRP’s hearings. This notion has been reinforced by both the premier and BC Hydro’s confused messaging around the project.
At first, Site C was to power BC’s homes, but when we became a solid net exporter of power in recent years – according to BC Stats – the rationale morphed into powering energy-intensive LNG projects. But BC Hydro undermined that statement during the JRP hearings, saying it was instead to export excess power to California – likely a money-losing proposition for BC.
Then, just last week, Christy Clark went back on her LNG argument, admitting that Site C was not in fact required for that industry. Even Hydro acknowledges we won’t need the power from Site C until 2022 at the earliest, but the crown corporation has a long history of exaggerating demand, and, thanks to improved conservation, BC’s power consumption has barely risen since the early 2000s and shows no signs of increasing – an important fact Hydro ignores.
Buy high, sell low
Because the need isn’t there, and because Site C would be one of the most expensive new energy options available to British Columbians, every watt will be produced at a loss as we dump unused power on the North American grid – which pays something like $30-35/megawatt hour for power which will cost us around $100 to produce.
This led the retired head of the Major Power Users’ Association of BC, Dan Potts, to predict a $350 million/year operating loss for taxpayers from Site C . “This project is turning gold into lead,” said Potts at a recent Vancouver press conference on the project.
[quote]It’s going to have a legacy of wealth destruction…It’s going to sap the province’s ability to raise money and borrow money, to do other things, such as infrastructure, hospitals, schools – all the things we need to do.[/quote]
First Nations lawyer up too
Finally, in addition to both provincial and federal lawsuits from the Peace Valley landowners, Site C faces legal challenges from BC’s Treaty 8 First Nations, as well as separate actions from Alberta’s Treaty 8 First Nations.
Knowing the victorious track record of Aboriginal court cases in Canada of late, even if the Liberal government makes the mistake of forging ahead with Site C Dam, it can expect to run headlong into a wall of legal challenges.