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The NDP’s dam problem

Rob Shaw: For the second time, John Horgan discussed possibly cancelling Site C. The next set of problems that arise there will be his and his alone.
Premier John Horgan and Energy Minister Bruce Ralston announce the decision on Site C (BC Government Flickr)

Premier John Horgan has played his last get out of jail free card this week when it comes to Site C, with the revelation the troubled megadam is now $6 billion over budget and one year behind schedule.

Horgan didn’t start the project. Or pick the location. Or sign the contracts. Or sign off on the design. Or break ground on construction. So he’s mostly got a pass for the dam’s problems to this point, many of which can be traced back to the initial 2014 decisions made by B.C. Hydro and the previous BC Liberal government.

“The former government started the project to get it past the point of no return,” Horgan said Friday at his news conference. “We're going to complete the project because it's in the best interest of British Columbians.”

Four years into the NDP administration, that defence has well and truly run its course. The situation at Site C keeps getting worse. It’s the current government’s job to get a handle on it.

Horgan has twice brought before his cabinet the question of whether to cancel the project.

The first time, in 2017, he chose to proceed because the alternative - an estimated $4 billion in sunk cost and remediation - would have left British Columbians with nothing but a spike in their electricity bills.

The second time, this week, he had to navigate growing geotechnical concerns about the dam’s foundation, delays caused by COVID-19, cost overruns, and a cancellation estimate of $10 billion in sunk and remediation costs.

His decision was still the same: proceed.

“I appreciate there are a significant number of British Columbians who have never been supportive of this project, and they are not any happier today than they were in 2017,” said Horgan.

Horgan has twice brought before his cabinet the question of whether to cancel the project.

“But what I have learned, I have to say quite candidly, over the past three and a half years, is that I don't have the luxury of fretting over the past. I have an obligation to make sure I'm focused on the future.”

Future-focused Horgan then spent the bulk of his press conference pointing back to the past.

Risk the project might still run over-budget?

“Managing the contract that the BC Liberals signed has been difficult because it transfers the vast majority of the geotechnical risk back to BC Hydro,” said Horgan.

First Nations still opposed because they felt they had no choice but to sign benefit agreements with Hydro?

“Those benefit agreements were signed by the previous government,” said Horgan.

Additional geotechnical problems flagged in the reports by two independent engineers?

“We were aware, before the BC Liberals entered into the contract that they signed to get the project going, of the challenges on the left bank of the project,” said Horgan.

“The BC Utilities commission, had they been asked early in the process, may well have had expert witnesses giving that information directly to the public. The BC Liberals short-circuited that. That information was not made public.”

Don’t get the wrong idea though:

“I am not here today to put blame on anyone,” said Horgan.

God forbid.

“The project has been beset with challenges before it began, when it was begun by the previous government and when we inherited it in 2017,” he added.

Friday’s press conference emptied the NDP’s well of excuses.

Going forward, it’s going to have to rein in BC Hydro, where it appears much of the problems have actually originated.

Consider the way BC Hydro executives handled an independent oversight agency, Ernst & Young, hired by the Horgan administration to keep an eye on things as a condition of the premier’s approval to continue construction in 2017.

Friday’s press conference emptied the NDP’s well of excuses.

When Ernst & Young produced its first report in 2018 that “identified many deficiencies in Hydro’s systems” of project controls, Hydro executives told the independent overseer to, basically, pound sand.

“BC Hydro largely disagreed with Ernst & Young’s report but did adopt some of its recommendations,” wrote Peter Milburn, a former deputy minister of finance whom Horgan tapped last year to figure out why the NDP was still in the dark about Site C’s challenges.

“The report and BC Hydro’s response marked a deterioration of the relationship between the two parties.”

Hydro told Ernst & Young it was cancelling its contract, then thought better of the optics of turfing the premier’s hand-picked overseer. In a cunning move, it simply “rescoped the contract to lessen the role EY would have in overseeing the project.”

“Ultimately, BC Hydro determined the amount and type of oversight they would receive,” found Milburn.

“This appears inconsistent with the concept of independent oversight and with BC Hydro’s commitments to government.”

Hydro’s resistance to oversight didn’t stop at Ernst & Young.

It sidelined the Project Assurance Board (PAB) that Horgan put into place in 2017. The chair of Hydro was also the chair of the oversight board for much of 2018, a key year of decision-making. Almost half the board members also sat on Hydro’s board.

The other project board members had varying skillsets that didn’t appear up to the task at hand. They certainly were no match for a Crown power corporation trying to keep them in the dark.

“A number of PAB members expressed concern that the substantive issues were not coming before them and that management curtailed their mandate,” Milburn found.

Milburn’s 46-page report is a damning indictment of the senior leadership at B.C. Hydro, which appears to be pursuing Site C with a single-minded focus that has left the government largely in the dark and taxpayers on the hook for immense overruns.

That’s not the way a Crown power agency is supposed to operate.

Hydro’s board chair, Ken Peterson, took the fall and was dismissed on Friday. Given the scope of the obfuscation found by Milburn, you might have expected more changes to Hydro’s senior management. But there was no sign of that from Horgan or Energy Minister Bruce Ralston.

Instead, both expressed somewhat shaky assurance that the worst cost overruns are behind us on the now $16 billion Site C project.

That’s not the way a Crown power agency is supposed to operate.

“I am confident that the numbers that we put forward today, as based on the assessment of treasury board and Hydro officials, are certain for today,” said Horgan.

“But the future, I wouldn't have anticipated a global pandemic, so I'm holding my counsel on these questions for that very reason.”

That’s not particularly convincing.

The next time a problem pops up at Site C, Horgan will be the one to wear it.

Rob Shaw has spent more than 13 years covering BC politics, now reporting for CHEK News and writing for The Orca. He is the co-author of the national best-selling book A Matter of Confidence, and a regular guest on CBC Radio.

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