Where will government draw the line on the cost overruns at Site C?

The overall health of the Site C project has been classified as “red,” facing serious cost overruns and schedule delays. Site C is proving to be a colossal waste of money, and we can’t afford to just keep digging when we don’t know how deep the hole will go.

Today I asked the Minister of Energy, Mines and Petroleum Resources when this government will draw the line on the cost overruns at #SiteC, and reconsider the cost burden they’re asking British Columbians to shoulder. I also asked if the Minister would clarify on the record that the cost uncertainties with Site C are largely due to geotechnical instability and not COVID-19.

[Transcript]

SITE C POWER PROJECT

A. Olsen:

To nobody’s surprise, we’ve recently found out that the Site C dam is in serious trouble. The overall health of the project has been classified as “red,” meaning that it is facing serious cost overruns and schedule delays.

Site C is proving to be an endless money pit, and British Columbians are footing the bill. It started with a $6 billion price tag, rising to $8.8 billion in 2014. When this government forged ahead in 2017, it was at $10.7 billion. Now the price tag is unknown, but we know that it’s going to be much higher than $10 billion.

Site C is proving to be a colossal waste of money, and we can’t afford to just keep digging when we don’t know how deep the hole will go.

My question is to the Minister of Energy, mines and petroleum resources. How much is too much? Where is the government going to draw the line on the cost overruns at Site C and reconsider the cost burden they’re asking British Columbians to shoulder?

Hon. B. Ralston:

I thank the interim Leader of the Third Party for the question.

In considering an answer to the question that has been posed, I think it’s important to recall that the previous government, the old government, recklessly pushed the Site C project past the point of no return. Then-Premier Christy Clark said: “I will get it past the point of no return.” The government refused to let our independent energy watchdog…
Interjections.

Mr. Speaker:

Members.

Hon. B. Ralston:

…the B.C. Utilities Commission, review the project.
Interjections.

Mr. Speaker:

Members, the minister has the floor. Thank you.

Hon. B. Ralston:

They signed off on a design that included geological risks, and they spent billions of dollars without proper oversight in their efforts to push this project past the point of no return.
In the summer of 2017, we inherited a project facing significant cost pressures, but we were managing them. We are now facing geological risks in the design that the old government approved. In addition, the global COVID-19 pandemic has created unforeseen challenges to the Site C project.

In March, B.C. Hydro significantly scaled down the project and focused only on essential work and meeting critical milestone. This was done in the line with advice from the provincial health officer to ensure the safety of workers and communities. B.C. Hydro is now in the process of safely scaling up construction activities in line with, again, the advice from public health officials.

[10:40 a.m.]

As detailed in the quarterly progress reports and the annual progress reports, there have been additional financial impacts on the project, such as an amendment to the main civil works contract. The COVID-19 pandemic continues to cause the most uncertainty when it comes to this project.

I’ll end there. I’m sure the member will have a supplemental.

Mr. Speaker:

Leader Third Party on a supplemental.

A. Olsen:

The BCUC disagreed with the assertion that the minister just made — that this project was past the point of no return. There was a commitment to send this to the BCUC to review the project, which suggested that it was not past the point of no return — or else, why would we send it to the BCUC to review the project? To now state that it was past the point of no return and to put this burden on the shoulders of the previous government to try to absolve the responsibility of this House that currently exists in this place is not acceptable. This project was not past the point of no return, because it continues to this day.

We have to recognize the fact that we are just throwing good money after bad on this project. In December 2019, the overall health of the Site C project was red. That was due to the serious geotechnical instability concerns and contract disputes. However, when releasing the overdue progress reports on the dam, the minister did then what he did today, which was lean in on COVID-19 to explain the cost overruns and the delays — further unacceptable.

Experts have been raising the alarm about the geotechnical instability on this dam for years. According to B.C. Hydro, the cost of fixing these problems has now become “much higher than initially expected.” So the massive cost escalations cannot be blamed on COVID-19 — at least, not honestly. The geotechnical issues are still not resolved, and it’s possible that the site may never be stable enough to support a dam of this size.

My question is, again, to the Minister of Energy, Mines and Petroleum Resources: can he clarify on the record that the cost uncertainties of Site C do not come down to COVID-19 and that the geotechnical instability is a significant factor in cost overruns and project delays that have yet to be resolved?

Hon. B. Ralston:

The member raises legitimate questions about the cost and schedule of the Site C project. Obviously, as the minister responsible, this is a topic I am deeply concerned about. That’s why I asked Peter Milburn, in his role as a special adviser, to work with B.C. Hydro to help provide fresh eyes and answers to the challenges faced by the Site C project.

I think it’s important to remember, though, that the Site C project was facing significant cost pressures and risks when we first formed government in 2017. These have worsened, in part — in large part — due to the global COVID-19 pandemic. As a result of the pandemic — the scaling down of the work on the project and the scaling back up — B.C. Hydro is undertaking a rebaselining analysis of the project. This involves reviewing the cost and the time required to complete the remaining work for the project. This will help our government understand the true impact COVID has had on the budget. I anticipate being able to provide an update on cost projections later this fall.