It’s getting down to the wire for the NDP-led government to announce its decision on Site C Dam. The corporate media and a some big guns for labour have been making a sales push to throw the beleaguered project a lifeline, and many fear they could succeed. That would be the biggest mistake the NDP could make. They didn’t create this monster, but they will own the consequences if they keep it alive.

There are three reasons given for carrying on with Site C: 1. We’d be throwing away $4 Billion if we killed it; 2. We’ll eventually need the power; 3. The jobs!!! All of these are bogus – and the cost of getting this wrong, for ratepayers and taxpayers (YOU), is astronomical.

A bottomless hole

Even if you buy the overstated remediation costs for the project, even if you accept the far-fetched premise of $4 Billion lost (experts like the head of the Site C Joint Review Panel peg it closer to $3 Billion), you’d have to consider the cost of not cancelling Site C. For once, let’s be frank. Even the BC Utilities Commission, when it found the project could easily exceed $10 Billion, even go as high as $12.5 Billion (up from Hydro’s estimate of $5 Billion-6.6 Billion in 2007), wasn’t fully appreciating how bad this could get.

Just look at Newfoundland’s yet unfinished Muskrat Falls project, estimates for which have more than doubled from $6.2 Billion to $12.7 Billion. At $6.7 Billion spent, many there say it’s past the point of no return (familiar), but Site C isn’t nearly that far along, so it should be viewed differently. The net result for Newfoundlanders will be an additional $150 a month in electrical costs per homeowner…forever! Newfoundland has a smaller population to absorb its cost overruns, but we’ve got our own share of problems to compound the damage from Site C. Think of the lawsuits from First Nations whose treaty rights are being undeniably violated (while both the provincial and federal governments tout UNDRIP – i.e. they know better).

But the biggest issue is the shaky ground on which the project is being built – literally. Way back in 2009, I interviewed a longtime farmer in the region, Dick Ardill. His family has been in the Peace going back as far as mine, the Beatties, who lost their ranch to the first big dam there, WAC Bennett. Dick must have been well into his eighties when I spoke to him, with a lifetime of practical knowledge of the soil and slope stability in the valley. He told me then the biggest reason not to build the project was the unstable land. He’d seen firsthand the Attachie slide of 1973 and many others over the years. The mixture of shale, clay, and alluvial soils made for an awful place to put an earthen dam.

The 80 km section of the valley – from Hudson’s Hope to the foot of Fort St. John – where Site C was proposed was in some ways worse in this respect than where the Bennett Dam and Williston Reservoir were built (the Williston gobbled up far more land than originally contemplated, due to slumping, including my grandfather’s property above the planned reservoir). Granted, the Williston Reservoir behaves differently than would Site C, which is more a massive run-of-river project than a storage reservoir with large swings in water levels, but a 1991 report by geologist Norm Catto for the Ministry of Energy and Mines had this to say about the eastern Peace Valley, which includes the area where the dam itself is proposed:

[quote]Thus, all of the major terrain units present in the eastern Peace River region are subject to slope failure. Extreme caution should therefore be observed in any effort to exploit or utilize river valley slopes.[/quote]

This report appears to have been ignored by Hydro in evaluating Site C.

Cracks in the dam

Flash forward to the tension cracks formed around the dam site and the hundreds of millions of dollars of cost overruns already attributable to these very stability issues and you see that old Dick knew what he was talking about. And here’s the thing: There’s no bottom to this problem. Like a highly leveraged 2008 stock deal, we have no idea how deep this hole gets. Ten billion? How about fifteen? Or twenty?

If everything went perfectly according to plan (the opposite of what has happened thus far), Hydro intended to have the dam paid off by 2094! That’s now blown, so what are we talking? 2120? 2150? How many generations of your descendants will be paying for this mistake? And what’s the interest on $20 Billion amortized over a century, at much higher interest rates than we currently enjoy? (The BCUC rightly chastised BC Hydro for assuming low rates in perpetuity). In other words, what’s the real cost of this project? I could take a stab and say $60-80 Billion, and you could say that’s just a wild-eyed guess. Then I would reply, “Exactly – I’m using BC Hydro’s methods.” (For the sake of argument, though, at a rate of 5%, $20 Billion, paid off over 100 years, comes to roughly $100 Billion in principal and interest. Just sayin’).

Oh, and remember that the NDP wants to do all this while freezing Hydro rates. LOL! If they’re serious, they’ll have to raise taxes or make massive cuts to social services. They can’t have their cake and eat it too.

According to Moody’s, the single biggest threat to our Triple-A credit rating is BC Hydro-related debt. In other words, Site C – piled atop all the sweetheart private power contracts and financial blunders the crown corp committed under the Liberals’ direction – will cost us our rating. Then up goes the province’s cost of borrowing – for all our debt – and the house of cards comes tumbling down. We’re worried about (at most) $4 Billion in sunk costs, remediation and cancellation fees? Chump change!

But that’s not the worst of it. Dr. Vern Ruskin (PhD, MCom, BSc, Retired PEng [BC]) warned the BCUC of serious safety concerns, partly due to the above stability issues around the dam site. Dr. Ruskin is no less than the former Director of BC Hydro’s Planning Division, responsible for planning, designing, budgeting and contracting more than ten dams in BC, including WAC Bennett, Peace Canyon and Site C in its early stages. Among other things, Dr. Ruskin warned that changes made in 2011 to the original dam design pose increased risk of dam failure, as do these recent tension cracks and the instability they suggest.

The BCUC did not consider these concerns of Dr. Ruskin because dam safety was outside of the terms of reference for its review. But there is no reason the NDP-led government should ignore Dr. Ruskin. The enormous consequences of a dam failure – potential human injury and loss of life, widespread property damage – would make these financial concerns seem trivial by comparison.

“We’ll eventually need the power”

Here’s a thought: For the last decade, our population has been growing, we’ve been building bigger houses and acquiring more gadgets, but our power consumption has remained flat. Is it so wild a concept that ten or twenty years from now the same thing could be true? Our gadgets are getting more efficient, our building codes more stringent, and we’ve seen an exodus of heavy industry, which once consumed a third of our total electricity. Wait, are we stopping raw log exports tomorrow? Did I miss the memo about a whole bunch of pulp mills reopening? Are there dozens of new mines breaking ground this year? Will BC defy global economics and magically produce an LNG industry after all the years of failure?

But let’s play this out, for sake of argument. Say in 20 years we do need more electricity. We sure as heck wouldn’t be building Site C to supply it. At the rate renewables of all stripes are dropping in cost, we’d avail ourselves of the latest, best technology – which wouldn’t be a 70-year-old idea for a mega-dam. No less than the head of the Site C Joint Review Panel, Harry Swain, the BCUC itself, and other eminent energy experts not tied to Site C, Hydro or the government, have come to the same conclusion. We won’t need the power for a very long time and if and when we do, Site C will not be the best option, either environmentally or in terms of cost.

One final point that connects to the cost issue: Since we don’t need this power, it will have to go into our grid and across our borders to customers in Washington State and Alberta. In real terms, it will cost over $110/megawatt hour (MWh) to produce, yet the going rate to sell this power has been hovering around $35/MWh for years. You do the math. Every megawatt produced carries a loss to the ratepayer.

But the jaaaawwwbs!!!

A few quick notes:

1. BC’s big unions aren’t getting these jobs – a different, quasi-union called the Christian Labour Association of Canada, already has the lion’s share of this gig. It is also noteworthy that one of BC’s biggest unions, the BCGEU, has come out against the project, so there is a divide within labour on the issue.

2. We keep hearing 2,000 jobs – balderdash. With a series of layoffs and a significant decline in vehicles and visible work on the property – much of that related to these tension crack issues – local sources suggest the real number of workers is far lower than Hydro and the government claim, pegging the number at 500 or less. These jobs are temporary and have come under criticism for allegedly unsafe conditions.

3. If we’re prepared to spend large quantities of tax dollars and hydro fees simply for a make-work project, there are far better ways to employ far more British Columbians for far less money, as a new analysis from UBC’s Program on Water Governance underscores.

This jobs argument is the weakest link of the pro-Site C camp and the NDP should treat it as such.

NDP deciding its own future

The costs to ratepayers and taxpayers – along with all the other impacts on farmland, First Nations and the environment – are impacts Site C would have on British Columbians, fauna and flora. But the NDP would be wise to consider the impacts the project would have on them, politically. Had the BCUC come out with rosy outlook for the project, that would perhaps have given them some cover to continue forward. It didn’t. Now, the ball is in the current government’s court and it is not only deciding the future of Site C, but its own future.

Many in the environmental community appreciate the moves the NDP has made thus far – (partially) banning the grizzly hunt, (sort of) taking a stand against Kinder Morgan, reviewing professional reliance, reviewing Site C. Yet, I have spoken with many colleagues and seen scores of comments on social media to the effect that if the NDP proceeds with Site C, they will abandon the party.

On the flip side, if the NDP kills Site C, will it lose labour votes? Will union lobbyists Bill Tieleman or Jim Quail turn their backs on the party? Hardly. It’s unclear what the Greens will do in the short term, but this delicate, temporary arrangement will be severely strained and, in the long run, Site C will further drive a wedge through the Left, causing the NDP to lose votes in the next election. This will all be compounded by the fiscal woes that will accompany this inevitable boondoggle. Just look to Ontario and Newfoundland to see the  political fallout from poorly made decisions on large-scale energy projects.

Green MLA Sonia Furstenau said it best in the legislature last week:

[quote]Up until now, this has been a BC Liberal boondoggle. The cost overruns, the ballooning debt, the questionable need for such a costly project: this is the Liberals’ mistake alone. But if the government decides to continue with Site C, they will become responsible for the impacts. It will be on the shoulders of this government.[/quote]

Indeed, if this government chooses to flood the Peace Valley (again), we may look back in years, drowning in unbearable power bills and debt, and realize that 2017 was the NDP’s high watermark. Then came the flood.

I start this exercise with a couple of general comments.

The detailed information available on the “progress” of BC Hydro since the Liberals took over in 2001 would be very difficult to pull together if we were left to government confessions of error or sleuthing by the NDP opposition. In fact, in this regard, the public are greatly indebted to Norman Farrell, Arthur Caldicott, Erik Andersen, Tom Rankin, John Calvert, author of Liquid Gold, Damien Gillis, myself and, on the question of Site C, people like Harry Swain, who have been steadily reporting and commenting, faced by stony silence from the government, since 2007 or earlier.

The Sun and the Province papers in Vancouver, with their mutual masturbation agreement with the Canadian Association of Petroleum Producers, have been in a coma where the government is involved, thus I think it imperative that The Tyee, The Common Sense Canadian, In-sights, Desmog Canada, and Laila Yuile be singled out and congratulated for providing a constant flow of information demonstrating the all-but-formal and clearly deliberate bankrupting of BC Hydro by the Campbell/Clark government.

Liberals raise Hydro’s obligations by $74 Billion

The hard fact is that under the Liberals, BC Hydro’s real debt – including all its obligations – in constant dollars has increased by 1,337%, from $6 billion in 2005 to $80.2 billion today. This total comes from Hydro’s most recent annual report (2016) and is made up by the following three categories:

1. Regulatory (Deferral) Accounts: $5.9 Billion
2. Long Term Debt: $18 Billion
3. Long Term Private Power (IPP) Contracts: $56.3 Billion

It must be noted that since the Liberal reign began in 2001, Hydro hasn’t been hit by a depression, a burst dam, a substantial labour dispute, a diminution of its customer base, nor any other calamity that could explain this huge increase in debt. In fact, according to Premier Clark and the brains of the outfit, Deputy Dreamer, Rich Coleman, thanks to Liberal policies of perfection, we had absolutely Sooper-Dooper times. Just how their largest trust from the people, BC Hydro, went $74 billion in the goo and de facto bankruptcy on their watch simply isn’t dealt with, on the the theory that if no one heard the tree fall in the forest, it never happened.

During this period, Hydro has been borrowing large sums to pay yearly dividends to the Minister of Finance for his annual cooking of the books to make it appear that BC has a balanced budget, a noteworthy piece of fiction in a government noted for fiscal legerdemain.

In fact, this has been a government that doesn’t just employ puffery or exaggeration, it lies through its teeth, as if lying was its default position. I raise this because in a moment I’m going to talk about a criminal investigation being required and in such matters, believability is a critical factor and I tell you plainly that neither Clark nor Coleman can demand to be accepted as truthful people on their public record.

Unforeseen catastrophes aside, there are only three possible answers as to how Hydro could lose all this money: grossly negligent management, money being wrongly spent, or money exerting undue influence on decision makers.

In law there there’s a maxim, “res ipsa loquitur” meaning “the thing speaks for itself”, and I suggest the pissing away of $74 billion does speak loudly and fairly to bloody awful management; yet it hardly seems likely that there wasn’t some culpable conduct somewhere in the mix. There may or may not be a fire but there’s a hell of a lot of smoke. Moreover, never forget that this is a tightly controlled Crown Corporation and the government runs it using its own pet poodles.

The fix is in

Let’s turn to Premier Gordon Campbell’s radical change of policy in 2002, which forbade BC Hydro from creating any new hydro power of its own (except Site C, as it had been on the books for decades), with new power to be produced on a tiny scale – no more dams or big environmental devastation. Dr. Andrew Weaver, the leader of the BC Greens who has always supported this scheme, told me they only used water wheels! There would be no damage to the streams involved and they would be run by small “mom and pop” operations.

Well, it turned out a tad differently, with rivers blocked, with what sure look like dams, huge pipes, a substantial powerhouse, a notable lack of waterwheels, river banks demolished, fish runs destroyed, trees knocked down and run by little “Mom and Pop” operations such as Ledcor and General Electric. Incidentally, this substantial environmental loss is not computed and included in the $74 Billion loss.

These teensy-weensy “Mom and Pop” operations called Independent Power Producers (IPPs) got a very good deal, in fact the sweetheart deal of all sweetheart deals, such that if you gave the same to your family, the taxman, once he stopped laughing, would disallow it!

In simple terms, BC Hydro must take all the power IPPs produce and pay 3 times the market price. They must buy whether they need it or not and, if you guessed that means during the Spring runoffs – when the bulk of their power comes and our electrical demand is at its lowest – Hydro must buy all their power even though their own reservoirs are filled to overflowing and didn’t need it, you’d be right. If you also guessed that Hydro must have to sell a lot of excess power at large losses, you get a gold star on your report card!

Losing 72 cents on the dollar

Citizens for Public Power member and SFU professor John Calvert explained it like so:

[quote] B.C. Hydro announced the outcome of its 2006 tender call for electricity from private energy developers. The results were startling. Not only had B.C. Hydro agreed to buy three times the power requested in the tender, it had done so at locked-in prices far above projected market rates…

…The core of that policy was laid out in the 2002 Energy Plan, which prevents B.C. Hydro from building new generation assets, and transforms the Crown corporation from a generator of publicly-owned electricity to a purchaser of energy from the private sector.

The rationale for this change is hard to fathom. The old policy worked very well. By generating its own power, B.C. Hydro ensured that ratepayers enjoyed, on average, the second lowest electricity prices in North America. This is because prices were based on the historic cost of production, not the current energy market price…[/quote]

Flash forward a decade to Norm Farrell’s update on the situation:

[quote]…over the past decade, amounts paid to IPPs have tripled. Independent power producers, more than doubled deliveries to BC Hydro, and the utility was forced to dump surplus power outside the province, with trades sales at an average, since 2005, of just 28% of prices paid private producers. And that loss is made worse because of Hydro’s collection and distribution costs.

Then years later, for every dollar we pay them, we lose more than 72 cents.

Consumer demand was not growing, private power supplies were rising and export markets were soft. BC Hydro could only dump power outside the province for little revenue or reduce its internal production. Again, the utility’s own reports lead to a conclusion.

The following numbers are drawn from BC Hydro’s annual and quarterly reports and from U.S. Department of Energy market recaps. They demonstrate that in nine months, BC Hydro paid more than $600 million above market to independent power producers – having purchased the power from IPPs at $85,261/GWh, while the market for selling electricity to the US market was just $28,930 CAD per unit. Unfortunately, the rate of loss is accelerating…

…Dr. Calvert’s warnings were insufficient and subsequent Liberal actions even more egregious. The professor noted early independent power producer (IPP) contracts locked BC Hydro (and BC taxpayers) into financial commitments of up to 40 years. Recently, contracts have extended to 60 years and all are indexed to protect suppliers against inflation. Some required large public expenditures for distribution. Calvert said IPP prices were double the market value but they’ve since risen to even more.[/quote]

Now here’s a little observation from Mr. Farrell that will make you feel warm and fuzzy all over: “We also know that, instead of costing between $400 million and $500 million every year, IPP payments have climbed beyond $1.3 billion yearly, a number that has increased 188% since 2011 when Christy Clark was appointed Premier.”

Now, none of this would have been possible if this the recipients of this government largesse with our money didn’t have friends on the inside. Campbell before her knew and now Clark knows that BC Hydro’s potential profitability and financial strength guaranteed corporate raiders would attack, seeking to convert public wealth to private. To be successful, they needed cooperation of modern political rulers and, whether explained by incompetence, philosophical bent or desire for covert rewards, the Liberals have cooperated fully.

It will only get worse

Even if the Liberals are given the boot in May, Hydro’s skyrocketing debt won’t stop here. Additional costs already baked into the crown corp’s plans will see its obligations rise to the hundred billion dollar range in the coming years. So serious is the problem that BC Hydro alone could cost BC its prized triple-A credit rating, as The Times-Colonist reported – albeit belatedly:

[quote]…projects like Site C are pushing up B.C. Hydro’s debt levels, and adding to concerns about the province’s overall ‘high debt burden’ compared to its peers, Moody’s also wrote in its credit opinion. B.C. Hydro’s debt has increased from $8.1 billion in 2008 to a projected $18.1 billion last year, and there is a further $20 billion expected in the future for infrastructure projects, a $2-billion annual upgrade program and the Site C dam.

‘The anticipated increase in debt continues to pressure the province’s rating since it raises the contingent liability of British Columbia,’ wrote Moody’s…[/quote]

And that’s assuming Hydro keeps Site C on track at $9 Billion – which is impossible to believe, given the Liberals’ track record with major capital projects more than doubling in cost. Dams are especially prone to wild cost increases (see Muskrat Falls), as recent geotechnical issues with Site C illustrate. Hydro is trying to tamp down concerns over a 400 meter-wide tension crack at the dam site, but locals have been warning for years about the unstable ground upon which the project is being built.

Grandson helps destroy grandpa’s legacy

Ironically and to me sadly, among today’s political facilitators of the utility’s destruction is W.A.C. Bennett’s grandson, and my late friend Bill Bennett’s son, BC Hydro Chair Brad Bennett, who is, I’m told, is a Liberal apparatchik and close Christy Clark pal. Another is Hydro CEO Jessica McDonald. She was Deputy Minister and confidant to Gordon Campbell in 2006 when the premier’s office invited predators to get rich on electricity.

 The companies give generously to the Liberals but it’s hard to get full and accurate figures since, as we now know from Elections BC, who recently sent their investigations of Liberal fundraising to the RCMP, donations are often laundered through individuals, and companies have been known to lie through their teeth on this subject.

One way to get a general picture is to go back to 2008 when the long-term contracts were handed out and there was a call for independent power projects, 75 proponents registered with B.C. Hydro. From July 1, 2008 to September 30, 2010 – when B.C. Hydro was making its decisions – 14 proponents donated $268,461 to the Liberals. Ten of the 14 were successful.

Shouldn’t someone go to jail?

The duties and powers of the Attorney General, Suzanne Anton, for the purposes of this article, are set out in admirable simplicity by the ATTORNEY GENERAL ACT. Under Section 2, Duties and Powers, article b) states:

[quote]The Attorney General must see that the administration of public affairs is in accordance with law.[/quote] 

Bearing in mind the enormity of the losses and complete lack of explanation by the government for this incredible emptying of the public purse, where is the Attorney General?

By the simple statement of the law as quoted above, her duty is clear. By long tradition, she sets aside her political role – especially when evidence of a crime comes to her attention – and it is reasonable to assume colleagues are involved.

I place before you my opinion in plain terms. There is a great deal of money involved here and plenty of people who feel entitled to share it. We have a premier who, in a political context, has the morals of an alley cat. The deputy premier, also in charge of gas, is hardly any better. It’s surely fair to say that when politics is involved, a fairy tale is second nature, their default position.

The death of BC Hydro has nothing to do with the ordinary risks of the business world and there are no events beyond human control here. Of considerable importance, the premier and the minister in charge are struck dumb on the question of how a thriving monopoly on power could rack up $74 billion in unwarranted costs, with a full clientele and the means to meet all demands.

Ms. Anton, if you don’t order a full enquiry forthwith on the evidence before you, in light of the statutory requirement of the Attorney General Act and your sworn oath to “see that the administration of public affairs is in accordance with law”, it would be open to fair conjecture that this inaction is to protect your political colleagues.