Friday, December 08, 2017

Why I'd kill Site C

I have no idea what the government will do about Site C. (I do know that anyone who claims it’s an easy choice to kill the project or go ahead is not to be taken seriously.)

But if it was up to me, I’d opt for cancellation.

The people pushing for completion rely heavily on three flawed arguments.

First, that BC Hydro has already spent $2 billion, so despite the certainty of delays and cost overruns, the government might as well keep spending. 

That’s silly. Economists call it the sunk cost fallacy. The money already spent is gone. The question is whether the money still to be spent is a good investment. Anyone who has paid too much for a new clutch for an old car because they spent money on a brake job three months earlier understands the principle.

Second, they maintain that even if forecasts show the power isn’t needed, someone will probably show up to buy it. Maybe we’ll all start driving electric cars, the dam’s backers fantasize. That’s no way to justify spending billions of dollars.

And third, they talk about jobs. About 2,000 people are at work on the site. It will be rough for them if the project is shut down. But 2.5 million people are employed in the province, and the workers on the site have skills that are in demand. They don’t need a publicly funded make-work project\.

On the other side, the government has to consider the emergence of new technologies to produce green power at ever lower costs, the BCUC’s determination that the power from Site C won’t be needed for years and the risks of soaring costs.

The latter would be the deciding factor for me.

When then-premier Gordon Campbell announced the government would build the Site C dam in 2010, it was a $6.6-billion project. The price tag jumped to $7.9 billion, then $8.3 billion and now the BC Utilities Commission says the real cost will be more — perhaps much more — than $10 billion. 

That’s why I would bail, if I was the premier. (Pause for collective shudder.)

We know the costs of cancelling the project.

But continuing means signing a blank cheque. The dam could cost $10 billion, $12 billion or $15 billion. And the NDP government, having made the decision to go ahead, would own the consequences.

I’d say no.


Anonymous said...

30 billion lifetime financial servicing costs.?
BC debt downgrade aka higher interest costs.?
Why pay 12 billion for a dam when you can buy 2 cent usd KWh power on open market.?

Anonymous said...

You can't buy power when you need it at 2 cents per kWh. But changing technology is likely to bring lower cost power from renewable sources before Site C is paid for, leaving BC ratepayers with a Billions in stranded investment. Proponents of Site C seem oblivious that the technological risk in power generation is now higher than it's been for a century! This isn't your grandfather's hydroelectric dam, with a near certain payback over it's lifetime. It's very expensive, and far less likely to pay for itself than any dam in BC history.

Anonymous said...

Thanks Paul. A pithy summary.


J MacDuff said...

Paul. Short and true.How about the two glaring examples of failed projects that were pushed through, Muskrat Falls and Keeyask.

Anonymous said...

To put it another way; in the thirty plus years since Site C was first considered, no one has ever put forth a case, business or otherwise, that has stood up to scrutiny. “Because”, is not sufficient to spend over $10 billion to produce electricity that can only be sold below cost.

John' Aghast said...

And also consider the likelihood of a successful First Nation's Billion dollar lawsuit, that either the dam will fail or the reservoir will fill up with slide detritus and/or Horgan will commit suicide by passing on Chrispy's Blunder as a 'go'.
It's a no brainer. John is just waiting until after Christmas to make sure Santa and his Teamsters don't hand him a lump of coal.