On December 16, 2014, the Province of BC made a Final Investment Decision to proceed with the
development of Site C – an $8.335 billion dam project on the
Peace River with the capacity to produce 1,100MW of
A Cheaper form of Clean
Energy: The Province's
analysis, released together with news of its FID, concludes that
Site C will be a cost-effective alternative to help meet future
electricity demands in BC and in particular, will be cheaper than
developing gas-fired plants operated by BC Hydro, or any
alternative projects by Independent Power Producers.
A Landmark Major Project for BC:
Site C will be, in current dollars, the most expensive capital
project ever undertaken by the Province and merits scrutiny and
continuing review for that reason alone. But Site C is also
interesting because it will, over the next few years, provide
global insight into whether costs and construction schedules for
major capital projects can be effectively managed.
Sticking to the Budget:
As for capital costs, the baseline budget for Site C increased
from $7.9 billion (2010) to $8.335 billion (at FID), plus a special
reserve of $440 million, for a total capital budget of $8.775
million. However, post-FID cost certainty can be an elusive
goal for any major capital project. Site C in particular has
significant hurdles to overcome if the established budget is to be
met, including the likelihood of unpredictable legal challenges
being mounted and seriously pursued by First Nations, environmental
groups and other affected stakeholders. Whether or not the BC
Government can keep the Site C project on track, on schedule and
within the budget, there are likely to be lessons learned for other
major capital projects in the difficult process of capital cost
First Nations and Social License:
All eyes are focused on how the claims of affected First Nations
will be dealt with – whether through negotiation or in
litigation. The Tsilhqot'in case decided by the Supreme
Court of Canada last June laid the legal framework as to how, and
whether, incursions by government on First Nations interests can be
justified as being in the public interest. Although a
negotiated agreement with First Nations is the goal, Site C may be
a project for which no deal can be reached, at any cost, such that
the Tsilhqot'in ruling will be put to the test.
Immediately following the announcement of Site C's FID,
affected First Nations have uniformly and vehemently voiced firm
opposition, including threats to be uncooperative on other BC
projects, including LNG. Also, Site C will provide an
excellent opportunity to observe the costs and the processes
required to obtain the "social license" to build a
project of this scope. Environmental groups, local landowners
and First Nations have been preparing – some for years
– to contest the construction of Site C. How, and to
what extent the Courts will allow environmental groups and local
landowners to re-litigate issues dealt with in the regulatory
processes to date will be instructive for other major projects.
Major Projects in the Modern World:
A project of the magnitude and impact of Site C is extraordinarily
difficult to develop in modern democratic societies having a legal
and political culture designed to afford affected stakeholders an
opportunity to litigate their grievances, and affect the
outcome. Site C will almost certainly provide valuable
insight into how demands for significant capital projects can be
reconciled with powerful, and sometimes conflicting, stakeholder
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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