BC Hydro says it should have been more proactive as Site C costs overflowed

British Columbia's power utility says it should have been more proactive about ballooning costs on the massive Site C hydroelectric dam project, partly blaming a failure to budget for "low-probability, high-consequence risks."

BC Hydro says in a "lessons learned report" to the British Columbia Utilities Commission that it's on track to complete the project on the Peace River within a $16 billion budget.

But that's almost double the original 2014 budget of about $8.8 billion, which was increased twice, in 2018 and 2021.

BC Hydro blames the huge overrun on the pandemic, as well as a failure to budget for low-probability risks that included substantial geotechnical problems.

The utility says it should have "ramped up its internal project resources more proactively and sooner."

Site C is the third hydro dam on the Peace River in northeastern B.C. and it provides enough electricity to power about 450,000 homes every year. 

The 224-page report, submitted last Thursday, says future projects should better communicate the "breadth" of risks with the potential for significant impacts on budget and scheduling.

An executive summary says that "consistent with industry best practices" the methodology of the project’s cost-risk analysis meant that unlikely risks were excluded from the original budget. 

"Accordingly, the project contingency and project reserve were both insufficient to absorb the full costs when these high-consequence, low-probability risk events materialized."

It says that while the pandemic was "unforeseen," the potential geotechnical challenges were understood.

Enhancing the dam's right bank foundation accounted for $1.1 billion of the overall budget increase, left bank cracks accounted for $600 million, and construction delays caused by the COVID-19 pandemic accounted for $1.6 billion.

Further costs increases were related to contractor claims, redesigns, and other factors, it says. 

However, the report also says the challenges that sent the budget soaring were met with "ingenuity and determination."

"Overall, BC Hydro reflects on the Site C Project with pride and a commitment to learn and improve," the summary says.

Picture Courtesy: THE CANADIAN PRESS/Jonathan Hayward