Megaprojects spell mega-ruin

Government-owned power utilities across Canada have a costly, long-standing habit they can’t seem to kick: megaprojects.

In B.C., Manitoba, Ontario and Newfoundland and Labrador, public utilities are constructing megaprojects — typically defined as infrastructure projects costing more than $1 billion — that will cost electricity customers, at current estimates, $43 billion. The final cost to electricity customers, already expected to result in double- or triple-digit rate increases, will be a great deal higher once these megaprojects start generating power, given the track record of megaprojects of consistently coming in over budget and behind schedule. Two of the four megaprojects, already deep into construction, have experienced cost overruns of more than 100 per cent and are years behind schedule.

But it’s not just the sticker shock that should worry ratepayers — and the taxpayers that will be asked to bail out publicly owned utilities should their megaprojects bankrupt them. The integrity of the regulatory system established to protect customers from this type of reckless behaviour is another casualty. All along the way, the regulators that were explicitly put in place decades ago to protect ratepayers from uneconomic white elephants have been routinely ignored, undermined and, in one case, publicly disparaged.

In Manitoba, the $8.7-billion Keeyask dam being built by government-owned Manitoba Hydro is nearly triple the early cost estimates. Now, nearly a decade after the project was first proposed, Manitoba Hydro execs have finally come clean to customers on the magnitude of rate increases required to pay for the dam — nearly eight per cent annually The construction site of the hydroelectric facility at Muskrat Falls in Newfoundland and Labrador in 2015.