The Site C Panel Report and the Crisis of Credibility for BC Electricity Policy

Courtesy of BC Hydro

George Hoberg
May 9, 2014

Yesterday, the Joint Review Panel for the Site C dam project on the Peace River in northern British Columbia released its environmental assessment report. The panel did not recommend for or against the project, but instead chose to highlight some significant benefits from the project but also that the government has not convincingly made the case that the project is needed in the time frame proposed. As a result, the B.C. government (and the feds) can still choose to proceed with the project but doing so legitimately, given the concerns of the panel, just got much harder.

The panel’s report is striking both in terms of the approach it took and what it implies for the politics and governance of BC electricity policy. In sharp contrast to the Northern Gateway pipeline Joint Review Panel, whose report read more like a rubber stamp of the proponent’s own arguments, the Site C panel took a hard look at BC Hydro’s case for the dam. It challenged a number of the proponent’s findings, and was especially critical of BC Hydro’s justification for the project costs and superiority to alternatives (most notably, conservation and geothermal energy). The summary finding is that “The Panel concludes that the Proponent has not fully demonstrated the need for the project on the timetable set forth” (p. 306). It even had the temerity to recommend that if the governments “are inclined to proceed, they may wish to consider” having the BC Utilities Commission review several aspects of the case for the project.

Does B.C. Electricity Policy Have a Crisis of Credibility?

It seems that every time a major component of B.C. electricity policy is exposed to formal, independent review, it runs into serious problems. The last time B.C. electricity policy got a formal independent review was the BC Utilities Commission review of the BC Hydro 2008 Long Term Acquisition Plan. The BCUC was strongly critical of BC Hydro’s rationale for its plan, and rejected it. The Campbell government responded by stripping the power from BCUC to review major plans and projects, and the Clark government has continued those exemptions. The Clark government has given BC Hydro a rough ride with internal government reviews as well.

The Site C panel report was the first formal independent review since the 2008 shift in governance, and it leaves BC Hydro in quite a pickle. The panel report undercuts the rationale for moving ahead with the major dam, and it is hard to see how the government can move forward with legitimacy without involving the BCUC, something it has already said it refuses to do. BC Energy Minister Bill Bennett quickly dismissed the notion that the government would involve BCUC.

The proposed dam poses a challenging dilemma. As the BC Hydro report makes clear, and the panel report strengthens, the project has concentrated local impacts on an area quite precious to local residents, including First Nations. Yet it would also create a new source of low carbon energy to feed growing demand in the province. It has the added benefit of being able to store electricity to balance intermittent clean energy sources like wind. As a result, it would help foster the transition to a clean energy economy in BC and neighboring jurisdictions.

The challenge is that for the government to proceed legitimately with such a high impact project, there should be, at a minimum, a strong justification for the project’s need. The Site C Joint Review Panel report makes that much harder for the government. And if it chooses not to pursue Site C, the cornerstone of the province’s strategy to meet future electricity needs, BC Hydro needs to go back to the drawing board on its Integrated Resource Plan.

Several Other Notes

As a climate hawk I was dismayed to see the panel, by accepting that LNG compression will be done by burning natural gas, buy into a scenario for future LNG that will quickly blow through BC’s legislative greenhouse gas limits (page 304).

I’m very pleased to see the panel take such a demanding approach to the government’s rationale for the project. That’s why we have environmental assessment requirements. But I was a quite surprised at panel’s conclusions on costs. “The Panel cannot conclude on the likely accuracy of Project cost estimates because it does not have the information, time, or resources. This affects all further calculations of unit costs, revenue requirements, and rates” (p. 280). It’s one thing for a panel to carefully scrutinize a proponent’s analysis and find it inadequate. It seems much less credible, and justified, to conclude a proponent’s analysis is not credible because the panel didn’t have the capacity to scrutinize it. The panel seems content to tell the government it really needs to get the help of BC Utilities Commission.

Finally, environmentalists are fond of pointing out how environmental assessment processes are mere rubber stamps and virtually no projects get rejected. Certainly the Northern Gateway experience feeds into that pattern. But with this Site C panel report, there are now some quite striking cases accumulating of EA panels being strongly critical of projects (see Prosperity Mine for example).

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