SITE C CASH BURN GOES ON
Horgan awaits Milburn review before deciding fate of troubled B.C. Hydro project
When the New Democrats appointed Peter Milburn as their special adviser on Site C, Premier John Horgan said he would bring a fresh perspective on the troubled project.
“A noted public servant of some many decades, an engineer as well as a deputy minister of finance under the former B.C. Liberal government,” was the way Horgan characterized Milburn.
“So we are hopeful that he can have new eyes to bring to bear on this (project) and bring that information back to government.”
Milburn was indeed a respected public servant from years gone by, as well as a civil engineer and a former deputy minister of finance. But the perspective he brought to Site C was not quite as fresh as Horgan made out.
Milburn was involved in establishing oversight on Site C when serving as deputy minister of finance under the B.C. Liberal government.
The Liberals announced the go-ahead for Site C in December 2014. But the Treasury Board committee of the cabinet imposed a condition that had to be met before construction could commence the following summer.
“The ministry of energy and mines, B.C. Hydro and the Ministry of Finance will jointly develop appropriate performance metrics along with a regular in-year reporting system to monitor and report on Site C progress,” ordered the committee.
All this was confirmed in a June 29, 2015 memorandum from then-deputy minister of energy
Dave Nikolejsin to Milburn as deputy minister of finance.
“Please find attached the Site C reporting and accountability framework,” wrote Nikolejsin. “I am conveying this to you to fulfil the requirement, set out in the decision letter from the chair of Treasury Board regarding the Site C final investment decision.”
The Treasury Board chair was the then-B. C. Liberal finance minister Mike de Jong. The attachment ran to more than a dozen pages, including the reporting and accountability framework and a template for quarterly progress reports on Site C.
On construction, for example, the reports were to include “identification of any major scope changes compared to approved plans, schedule variances and performance against budget and revised budget outlook to project end.”
The reports were to be filed with the B.C. Hydro board, the energy ministry, Treasury Board staff and the independent B.C. Utilities Commission.
But the template came with a warning about contents: “Some levels of report may not include full information due to differing levels of interest or disclosure restrictions. For example, it should be assumed the BCUC report will be public, and that all levels of reporting will not have the same degree of detail.”
It was ever thus with B.C. Hydro and Site C. When the utility identified a stability problem under the foundations for the giant earth fill dam last December, it held off making the news public until a July 31 filing to the BCUC.
Even then it held back details about the exact nature of the problem, the potential impact on the budget and construction schedule, and solutions, if any.
Once that report was made public last summer, the New Democrats announced Milburn had been recruited to troubleshoot the project.
Milburn had overlapped only briefly with the progress of Site C under the B.C. Liberals. Construction began in July 2015 and he retired at the end of the month. But he was present at the creation of the initial apparatus for oversight, including a project board and a technical advisory board.
Indeed, the current technical advisory board consists of the same four internationally recognized engineering experts appointed under the Liberals.
The New Democrats delegated oversight to a project assurance board, albeit with some overlap from the previous government.
“We put in place significant oversight on this project and it hasn't proven to be adequate at this point,” said Horgan in justifying the Milburn appointment. “Mr. Milburn will explain to us why that is.”
The Milburn appointment, coming as it did when Horgan and his inner circle were already mulling a snap election, provided cover for the premier to refuse to answer questions throughout the fall.
The premier is still saying as little as possible while awaiting the Milburn report. Asked recently if he had made up his mind whether the project goes ahead, Horgan said “no, not at all.”
Still, the premier allowed B.C. Hydro to go full speed ahead on construction while the fate of the project was being decided by the Milburn review.
The river itself was diverted in the midst of the election campaign and construction continues apace according to the most recent project update.
The project budget, pegged at $8.7 billion under the B.C. Liberals and boosted to $10.7 billion by the New Democrats, is now inoperative according to last July's filing with the utilities commission.
But based on Hydro's own estimates, spending to date is approaching $6 billion and proceeding at a rate of about $100 million a month.
Friday marks the third anniversary of the NDP's last decision to allow construction to proceed.
Meanwhile, Hydro would “like to get your feedback to help us improve our biweekly Site C construction bulletins.
“As a thank you for taking the survey,” the invitation continues, “you'll be entered in a draw for a Tim Hortons or Starbucks gift card valued at $50.”
With the cash burn estimated at $3 million a day on the supposedly up-in-the-air project, one can only imagine the reaction of Hydro ratepayers.
Spending to date is approaching $6 billion and proceeding at a rate of about $100 million a month.