Peace Valley Landowners Association commissioned leading U.S. energy economist, Robert McCullough, to look at the business case for what will be province’s most expensive public infrastructure project
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>”Just weeks before BC Hydro plans to begin construction of the $8.8-billion Site C project, a new report says the Crown corporation has dramatically understated the cost of producing power from the hydroelectric dam.
…Mr. McCullough, in his report, said it appears the Crown corporation BC Hydro had its thumbs on the scale to make its mega project look better than the private-sector alternatives.
“Using industry standard assumptions, Site C is more than three times as costly as the least expensive option,” Mr. McCullough concluded. “While the cost and choice of options deserve further analysis, the simple conclusion is that Site C is more expensive – dramatically so – than the renewable [and] natural gas portfolios elsewhere in the U.S. and Canada.”
The report challenges a number of assumptions that led the government to conclude that Site C is the cheapest option. Mr. McCullough noted that the province adopted accounting changes last fall that reduced the cost of power generated by Site C. He said those changes are illusory and the costs will eventually have to be paid either by Hydro ratepayers, or provincial taxpayers.
Mr. McCullough, a leading expert on power utilities in the Pacific Northwest, also disputes the rate that BC Hydro used to compare the long-term borrowing cost of capital for Site C against other projects, noting that other major utilities in North America use higher rates for such projects because they are considered risky investments. The so-called discount rate is critical to the overall cost projections, and he said the paper trail on how the Crown arrived at its figure “can only be described as sketchy and inadequate.”
The report, obtained by The Globe and Mail, will be released on Tuesday by the PVLA.
The group will call on Premier Christy Clark to delay construction to allow time for a review by Auditor-General Carol Bellringer.
Ken Boon, president of the association, said the government needs to put the project on hold because it has approved the project based on poor advice. […]”<