British Columbia to Forge Ahead With Controversial Mega Dam
(Bloomberg) -- British Columbia is forging ahead with a controversial mega dam in a decision that’s likely to put pressure on the western Canadian province’s finances and prompt a political backlash.
With C$4 billion ($3.1 billion) already spent or committed to the Site C hydroelectric plant, Premier John Horgan said Monday it made more sense to proceed with the project than to cancel it. Begun under the previous Liberal government, the costs of the province’s first large dam to be built since the 1980s have ballooned by nearly a third.
“It’s clear that Site C should never have been started,” Horgan said. “But to cancel it would add billions to the province’s debt -- putting at risk our ability to deliver housing, child care, schools and hospitals.”
The provincial and federal governments originally approved the 1,100 megawatt dam on the Peace River in the province’s northeast in 2014. At the time, it was estimated the project would cost C$8.3 billion to build. The government said Monday it will now cost C$10.7 billion.
Furthermore, because the project has already burned through more money than it was expected to, the government said it would boost the project’s risk reserve and contingency funds by more than C$330 million.
Canceling the project would have led to a spike in rates for energy consumers in the Pacific Coast province for at least the next decade. If the government or its BC Hydro, the utility building the project, had fully absorbed the sunk costs, it would’ve risked damaging the province’s AAA credit rating and led to higher debt-servicing costs for taxpayers, government officials said.
Horgan’s New Democratic Party-led government took power in July after striking a deal with the Green Party to create the province’s first minority government in more than six decades. The decision on Site C is likely to ruffle that alliance. The escalating costs could also put pressure on the finances of the government, which in September had forecast a C$246 million surplus in the fiscal year ending March 31.
"The old government recklessly pushed Site C past the point of no return," Horgan said. "Our job now is to make the best of a bad deal."
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