The Canadian Environmental Assessment Agency announced earlier this week that it is terminating the environmental assessment of the massive proposed Bute Inlet private river diversion project.

The Agency explained the decision in a short media release:

Bute Hydro Inc. had proposed to construct 17 run-of-river hydroelectric facilities in the vicinity of Bute Inlet. The project was referred to a panel review in May 2009 and the Panel appointed in the summer of 2009. In March 2011, as Bute Hydro Inc. did not intend to move forward with the environmental assessment process, the Minister of the Environment disbanded the Panel and released the Panel members from their obligations under the Canadian Environmental Assessment Act.

Given that the proponent (currently Alterra Power Corp.) has indicated that it does not plan to proceed with the environmental assessment process in the near future, Fisheries and Oceans Canada, Transport Canada, and Aboriginal Affairs and Northern Development Canada, the responsible authorities, have confirmed that they will not exercise a power or perform a duty or function in relation to the project.

The proponent may apply to commence a new environmental assessment process if and when it determines that it wants to proceed with the project proposal.

The news is somewhat surprising, given the announcement by proponent Alterra Power earlier this month that it has signed a deal with the local Sliammon First Nation to build transmission lines for the project through its traditional territory.

It is not clear whether the withdrawal of the project from the environmental process is connected to a recent announcement by the Harper Government to eliminate thousands of environmental assessments and to “streamline” the assessment process via changes enacted through the government’s omnibus budget bill.

As the above statement from the Canadian Environmental Assessment Agency notes, “the proponent may apply to commence a new environmental assessment process if and when it determines that it wants to proceed with the project proposal.”

However, private power projects and BC Hydro’s accounting practices have come under considerable scrutiny over the past several years from the province’s Auditor General, a former Hydro CEO, and independent economists. Serious concerns have also been raised about the environmental impacts of these projects – with revelations of widespread fish kills from several projects in operation.

The Bute project proposal has lingered at the environmental assessment stage for 3 years, held up in part due questions about impacts on fish – concerns which are heightened in light of the above new evidence of fish kills from similar projects.

Given the size of the anticipated purchase contract the project would require – more than double Hydro’s current plan to purchase an additional 2,000 Gigawatt hours a year of private power – and the NDP’s repeated vow to put a moratorium on new projects, it is difficult to conceive how the project could be revived at this stage, even if the Harper Government were to waive its environmental assessment requirements.