Independent Economist: Site C Dam Numbers Don’t Add Up


The following is an open letter by independent economist andCommon Sense Canadian contributor Erik Andersen to the leaders of BC’s four major political parties on the eve of the May 14 provincial election.

Dear Ms. Clark, Mr. Dix, Ms. Sterk and Mr. Cummins,

I am writing to all of you political party leaders in the midst of the BC provincial campaign, as a senior economist who is very concerned that the proposed construction of Site C dam on the Peace River may push our provincial indebtedness beyond its already critical level.

The disclosed total liabilities of the province a year ago, according to government’s own figures, were $70 billion.  In addition, the Auditor General confirmed that as of a year ago BC’s “Contingencies and Contractual Obligations” totaled another $96.374 billion.  By the time the dust settles, the fiscal year just ended (2012/13) will likely have the provincial total liabilities closing in on $200 billion. The bulk of the nearly $100 billion of contractual obligations come from the IPP contracts to which Hydro has committed us.

Site C represents the addition of at least $8 billion to the already seriously bloated debt load directly associated with BC Hydro and its exaggerated expectations from industrial “want-a-be’s”.

Over the course of the past four decades the need for a Site C generation facility has been part of the larger and exaggerated demand narrative BC Hydro has been telling. The demand exaggeration theme goes as far back as 1961.  It is no different today.

Where is the evidence of future need? It is certainly not from residential and commercial customers in BC (which has actually decreased on average since 2008). The future need, as stated repeatedly by the Liberal government of late, is strictly industrial, specifically the proposed LNG plants.

But the irony, not missed by many, is that by the design of the rate structure, we are expected to shoulder the financial burden that is created when Hydro contracts/builds at costs of  +$100,000 per GWhr per year yet plans to sell to their new “best friends” at $35,000 per Gwhr per year. This is not new for Hydro . Hydro’s narrative of greater future need is just as before, a fiction created to be the cover for a ‘borrow and build into financial oblivion’ strategy.  Site C is one important element in this flawed narrative.

One must consider the “market” prices for electricity are in the western part of North America. These are the best indicators to determine whether electricity is currently in surplus or shortage. While Hydro has been buying electricity from IPPs at $100,000 per GWhr or greater, Powerex has reported selling, on average, at $20,000 per GWhr in the past three years.

In 2011, the volumes indicated a large regional imbalance between electricity generation capacity and regional demand. In such circumstances, it is a very high risk strategy to build more capacity until there is evidence of sustained higher prices, indicating demand has tightened. We are a very long way from this condition, making the Site C plan irrelevant for a long time to come if not permanently, as new energy technologies are integrated in the future.

On the evidence there seems no case for the development of Site C. Hydro is financially crippled because it not only produced fictional narratives about future demand, but worse, acted on these exaggerations with tens of billions in contractual long-term obligations with IPP’s. Secondly, to knowingly build a new generation facility that needs to sell at $100,000 per GWhr or more in order to break even – when the regional demand for electricity is decidedly weak and expected to remain so for a long while, is absurd.  I don’t see Hydro customers, i.e., the voting public, thinking that is a good idea.

Clearly, it’s time to “draw a line in the sand” and say no to Site C.


Erik Andersen, Economist



BC Hydro audited reports for the past 12 years

Annual BC Hydro demand forecasts for the past 12 years

Annual Reports by the BC Auditor General

Personal correspondence between Erik Andersen and the Auditor General of BC, Feb 19, 2013

“White Gold: Hydroelectric Power in Canada,” Karl Froschauer

BC Ministry of Finance, Provincial Debt Summary/ Debt Statistics

BC Ministry of Finance, Contractual Obligations Supplemental/Public Accounts/Summary Financial Statements

Links to data sources for total provincial debt:

Links to data sources for contractual obligations:


About Erik Andersen

Erik Andersen is a retired economist who practiced as a transportation economist with the Canadian Transport Commission; with Airports Branch, Transport Canada; with ICAO and at private corporations such as Pacific Western Airlines. More recently he has been lobbying Federal Ministers to reform the way Canada Pension Plan Investment Board invests pension funds. He has been using his talents of late to expose the calamitous fiscal impact of private power companies on British Columbians.

1 thought on “Independent Economist: Site C Dam Numbers Don’t Add Up

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    Saturday, 18 May 2013 07:38 posted by Lipozene

    I like the cut of your job 🙂 or at least your thought process but sorry to say, I honestly think you would have fully sold me on the idea had you been able to back up your premis with a substantial bit more solid facts.

    Thursday, 16 May 2013 14:53 posted by Wilson

    A friend of mine claims that BC is a net energy importer; this article suggests otherwise. Anyone know where I might find evidence on either side?

    Friday, 10 May 2013 04:53 posted by Lipozene Reviews

    Been reading this site for awhile now, always has really good posts and topics please keep it up! loads of blogs are going under lately from lack of new posts etc Lipozene Reviews

    Tuesday, 07 May 2013 11:40 posted by scotty on denman

    The Neo-Right BC Liberal regime is as all other of the same ilk: bankrupt publicly owned monopolies, then sell the carcasses to private interests. Site C makes no economic sense except to that end. Yet one value not articulated often in this regard is the value of the farmland the damn would flood, fertile and well watered. This is what makes Site C compare unfavourably to almost any other mega-damn project BC might entertain.

    Tuesday, 07 May 2013 10:59 posted by George Smith

    Why is it that this $200 billion debt sinkhole created by the Liberal Party is not the absolute defining issue in this leadership race? Christie Clark is brazenly claiming to somehow be capable of eliminating this debt, most of which they, and she, created? Helloooo.

    Saturday, 04 May 2013 21:49 posted by Hugh

    We know that our Hydro rates are going up, a lot.

    When that happens, people and business will cut back their usage.

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