The rush to develop BC’s $6-billion North Coast Transmission Line risks charging down the same troubled path of poor oversight and cost over-runs faced by the Site C dam, critics warn, pointing to a new report.
At the end of October, BC Hydro provided the British Columbia Utilities Commission (BCUC) with its Site C “lessons learned” report, which outlined why the Peace River project costs nearly doubled to $16 billion from the original $8.8 billion figure in 2014.
The North Coast Transmission Line (NCTL), which will power natural gas operations, LNG export facilities, mining and the Prince Rupert port expansion, is the next big-ticket item tackled by BC Hydro.
It will double electricity flowing from Prince George to Terrace and north to Bob Quinn Lake. The NCTL’s cost estimate also has doubled in two years since first being announced in 2023, up from $3 billion.
The BC government is looking for significant federal funding for the project which made it onto Prime Minister Carney’s next major projects announcement Thursday.
But if BC Hydro doesn’t take necessary lessons from Site C, both governments could be getting more than they bargained for.
Problems foreseen and unforeseen
The Site C report detailed significant geotechnical problems that surfaced on the banks of the dam, along with COVID-19 cost impacts. Enhancements to shore up the right bank foundation and fixing left bank tension cracks totalled $1.7 billion. The pandemic, which sidelined construction plans in the summer of 2020 by 60 per cent, added $1.6 billion to the bill.
The COVID-19 pandemic was “unforeseen,” the report said. The geotechnical challenges, however, were understood — but considered low risk, so weren’t adequately budgeted as contingencies. Other areas identified to avoid escalating costs for future projects examined problems around contract and risk management, and project governance.
The Crown utility’s report identifies problems useful to the province and BC Hydro as they undertake the North Coast Transmission Line (NCTL), said Richard Mason, a former member of the BC Utilities Commission.
There was clearly insufficient wiggle room in the budget for contingencies, even if they were deemed unlikely, said Mason, who also sat on the BCUC panel that independently reviewed Site C in 2017.
The report also acknowledged the Project Management Office lacked “enough people with the right skills to manage the complexity of the project,” he said.
However, it’s unclear if BC Hydro has indeed learned how important critical independent oversight is for big projects like the NCTL, Mason said. During Site C’s construction, risk and contracting management issues arose because such scrutiny wasn’t in place from the start of the project.
“I would conclude that’s a lesson [BC Hydro] should learn — whether they did or not,” Mason said.
Another previous Site C review led by special advisor Peter Milburn in 2020 underscored the need for outside expertise on the project assurance board — formerly stacked with the Crown corporation’s directors — and recommended BC Hydro actually follow those experts’ advice.
The most recent report found BC Hydro implemented Milburn’s recommendations to improve governance for Site C.
Yet, the new report underplays those recommendations, suggesting BC Hydro “consider” a more independent, autonomous project board for future projects like the NCTL.
There are other red flags on the amount of independent oversight the transmission line will get, Mason said.
The B.C. Liberals exempted Site C from a BCUC review, and the project faced significant opposition from First Nations and environmental groups.
The B.C. NDP are doing the same with North Coast Transmission Line, as well as exempting it from an environmental assessment process, to fast-track the project. The province argues a BCUC review would delay the start of the line’s construction by 18 months.
Mason said bypassing the BCUC is “ill-advised.” A review could assess the need for the project, who benefits, and how costs should be shared between industrial customers and rate payers. It also increases the “social licence” of a big project, if neutral parties examine projects on the public’s behalf, he said.
“If people feel projects are imposed by a government with no review, people may be less supportive.”
Bill 31 a blueprint for disaster?
The province also introduced Bill 31 last month in another bid to fast-track the transmission line.
The legislation will allow Indigenous nations to co-own the transmission line, which will be still operated by BC Hydro.
It will also create a new electricity allocation framework, which will replace a first-come, first-served approach to industrial power requests and allow the province to prioritize grid connections for natural resource projects and limit the power available to data and AI centres, as well as banning any supply to cryptocurrency operations.
The B.C. Green Party has criticized the move as a power grab that will allow cabinet decisions made behind closed doors, while hollowing out the independent role of the BCUC tasked to protect public interest.
B.C. Conservatives also oppose the legislation for pushing the provincial regulators to the sidelines. Some Conservative MLAs have also questioned the need for the electrical transmission line, suggesting small-scale nuclear reactors or natural gas-fired electricity instead. Others note emerging industries like data centres or hydrogen producers aren’t going to invest if regulations on access to power aren’t predictable.
B.C. Premier David Eby has said the legislation is “non-negotiable,” going so far to say he’s prepared to call an early election if the bill isn’t passed.
New energy-hungry industries don’t offer as much revenue or as many jobs, according to the province. BC Hydro will offer some limited bundles of energy, 300 megawatts of power for AI and 100 megawatts for data centres, that companies can competitively bid on every two years.
However, BCUC already has the power to ration electricity if there’s good reason, but the regulator would have to demonstrate that openly and transparently, Mason notes on his blog on electrical governance issues.
Bill 31 grants BC Hydro and the province extensive authority to determine what industrial power gets power and at what price. Such broad powers, Mason warns, are susceptible to political favoritism and abuse.
