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Report Finds Weak Business Case for Site C Hydroelectric

By Water Canada 01:12PM April 20, 2017

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The University of British Columbia’s Program on Water Governance has released a new report that suggests that continuing with the Site C hydroelectric project will cost ratepayers approximately $1.5 billion more than if alternative energy projects had been developed.

The Program stated that the purpose of the new report is to provide deeper insight to government, policy-makers, and the general public regarding the economics of the Site C Project. The report addresses whether the Site C Project is past the point of no return from an economic perspective.

The report analyses circumstances that have changed since BC Hydro compared the project to alternatives in 2013. These circumstances include: a decline in the cost of the alternative resources to Site C (including wind); a substantial reduction in BC Hydro’s forecasted electricity need in 2024 and beyond; and an increase in the cost of the Site C Project.

The report considered which is the most economical option of completing, canceling, or suspending the project. These options were examined in the context of forecasts for electricity requirements, possible cost overruns in the Site C Project, different levels of conservation and efficiency, and a range of electricity prices in the electricity export markets. The authors also considered whether cancelling the Site C Project is preferable to suspending the project. They found that BC Hydro will have spent $1.87 billion as of June 30, 2017, and that cancelling or suspending the Site C Project will entail additional construction cancellation, demobilization, and suspension costs.

Ultimately, the authors found that the decision to approve the Site C Project in 2014 will cost ratepayers about $1.4 to $1.7 billion dollars more than if an alternative portfolio of resources had been pursued. The report also indicates that cancelling the Site C Project as of June 30, 2017 would save between $500 million and $1.65 billion, depending on future conditions. The authors state that suspending the Site C Project is preferable to cancelling by up to $350 million. Further, they state that both cancelling and suspending are preferable to continuing with the Site C Project.

Their recommendation based on the analysis and findings is that the Site C Project be suspended and referred to the BC Utilities Commission for a full review.

The Program on Water Governance conducts interdisciplinary research on water sustainability and makes the research available to the public. In addition to academic publications, they publish briefing notes and reports, with the goal of fostering dialogue on water policy with communities and decision-makers. They produced four previous reports on the Site C Project.

More information about the Program on Water Governance and their newest report can be found online.

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