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Vaughn Palmer: B.C. Hydro needs outside adviser now on North Coast power transmission line

Opinion: Government power utility insists it learned from massive cost overruns on the Site C dam, but it resists outside scrutiny

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VICTORIA — B.C. Hydro says it will apply lessons learned from the overbudget Site C project to manage the $6 billion North Coast transmission line, with construction scheduled to start later this year.

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Those lessons range include establishing a more-thorough assessment of geotechnical risks and ensuring that contractors are familiar with the winter weather along the route between Prince George and Terrace.

Vaughn Palmer: B.C. Hydro needs outside adviser now on North Coast power transmission line Back to video

Hydro laid out those and other commitments this month in a 258-page submission to the B.C. Utilities Commission, responding to more than 100 questions from the commission about lessons learned on Site C.

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Heading the list was the giant utility’s plan to avoid repeating one of the most-expensive mistakes ever made on a government project in B.C.

Before the start of construction on Site C in 2015, Hydro had access to reports and assessments that identified the geotechnical risks of constructing a hydroelectric dam at that location on the Peace River. Yet the utility chose to discount those risks as having a “low probability” of materializing albeit with “high consequences” if they did.

Indeed, serious geotechnical problems were identified under the dam, spillways and generating station four years into construction. The resulting delays and fixes added $2 billion to the price tag of the $16 billion project.

“B.C. Hydro has applied the lessons learned on low-probability, high-consequence risks on the Site C Project to the North Coast Transmission Line,” says the submission to the commission.

“The low probability, high-consequence risks are being reviewed through detailed and early discussions between the project team and the governing bodies to determine the likelihood of the risk materializing and if additional contingency or project reserve should be established.

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“In cases where no additional contingency or project reserve is established, the governing bodies will be made aware of the impacts to the project’s cost and schedule if the risks were to materialize.”

Note that all of this communication will take place in house, between Hydro and its overseers. There’s no indication that the risks and consequences will be shared with the public.

It recalls the John Horgan NDP government’s decision to cover up the geotechnical problems at Site C until after the votes were counted in the 2020 provincial election.

The report says the main geotechnical concern with the North Coast Transmission Line “is primarily related to the foundation of the transmission towers and Hydro has strong internal expertise related to transmission tower foundations.”

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Even so, the utility ran into significant cost overruns on the earlier northwest transmission line, as well as the line linking Site C to the grid.

Hydro provided a detailed breakdown of its claim that the COVID-19 pandemic added $1.6 billion to the cost of building Site C.

The utility also addresses Hydro two glitches that emerged early in construction — the bankruptcy of one of the partners on the major civil works contract and another operator’s struggle with in the well-below zero winter temperatures of the Peace River country.

“The very high contract values associated with the Site C opportunities attracted foreign multinational contractors that had limited or no experience working in B.C.,” explained Hydro.

In future, all contractors and partners will be evaluated for financial viability as well as sufficient knowledge of local regulations and weather.

The submission to the utilities commission cites many other improvements in contract and project management, arising from things that did not work out with Site C.

The long list of lessons learned and remedies applied — some 250 pages worth — confirms that Site C was not an advertisement for Hydro’s ability to manage major projects.

On the North Coast transmission line, oversight will be handled by committee of the Hydro executive and a subcommittee of the board of directors. The board will also “consider the appointment of an independent oversight adviser.”

That would be a good move, given Hydro’s record of resisting independent scrutiny.

The Horgan government appointed Ernst and Young as an outside overseer on Site C in 2017. EY did such a persistent job of oversight that at one point Hydro threatened to terminate its contract.

Though the New Democrats used their legislative majority to push through approval of North Coast transmission line last year, major questions remain.

There was no official costing for the project in last week’s provincial budget.

The $6 billion, double the figure from last year, is only a rough estimate for the first two phases of construction from Prince George to Terrace. The government has yet to take a stab at costing the third phase, which will take the line from Terrace to a number of projects in the northwest.

The New Democrats say work on the project will start this summer.

Hydro says “major construction activities are expected to start in 2027 or 2028.” The company says it is spending $103 million on the project in the financial year ending March 31 and expects a further $2.3 billion over the next three years.

But that is without implementation approval from the Hydro board, suggesting that none of these costings are of the take-it-to-the-bank variety.

Bring on the independent outside adviser.

vpalmer@postmedia.com 

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