Fast-tracking Site C dam construction before May’s provincial election is an unusual decision driven more by politics than need, according to a Canadian expert in Crown corporations who suggests the relationship between BC Hydro and the Premier’s office may be “too close for comfort.”
Luc Bernier, the former head of the Institute of Public Administration of Canada, said Premier Christy Clark’s vow to push Site C past the “point of no return,” when B.C. has a surplus of electricity and Clark is still searching for a buyer for Site C’s power, leads him to believe that that “there’s too much politics around BC Hydro.”
“What seems unusual to me is the idea of locking up this project before the provincial election,” said Bernier, who holds the Jarislowsky Chair in Public Sector Management at the University of Ottawa.
“If B.C. doesn’t need the electricity for the next decade or so there’s no emergency to build it…The only emergency in this project is the coming election.”
BC Hydro’s Site C spokesperson Dave Conway has said Site C’s power may not be needed for up to 40 years.
Flat Demand Could Make Site C ‘Nightmarish Project’
Demand for electricity has been falling in B.C. since 2008, and the B.C. government now says it wants to sell Site C’s power to Alberta to electrify the oilsands, a move that Harry Swain, chair of the Joint Review Panel that examined Site C for the federal and provincial governments, called an “act of desperation.”
Swain pointed out that BC Hydro never mentioned Alberta as a potential market for Site C’s power in its application for an environmental assessment certificate for the project.
Earlier, high electricity demand from anticipated Liquefied Natural Gas (LNG) production was one of the reasons the B.C. government gave for building Site C. That demand has never materialized.
Given that B.C. has so much power that BC Hydro is paying independent power producers millions of dollars a year not to produce electricity, Clark is now counting on federal taxpayers to share the cost of a proposed $1 billion transmission line to send Site C’s power to Alberta, although Alberta has not yet committed to buying the electricity.
“If you don’t need the electricity you’re going to have a bill for nine billion dollars for a dam you don’t need,” Bernier said in an interview, pointing out that another large hydroelectricity project, the Muskrat Falls dam in Labrador, has become a financial boondoggle, in part because its power is not required.
“It’s not going to be a profitable project, it’s going to be a nightmarish project,” Bernier said of Muskrat Falls, which will add an average of $1,800 to the annual hydro bill of every customer in Newfoundland and Labrador.
Economist Jim Brander, a professor at UBC’s Sauders School of Business, said BC Hydro’s technical staff, not politicians, should make the decision about the need to push Site C past the point of no return, based on questions such as electricity demand and the dam’s projected rate of return.
A Crown corporation’s senior management should be arms-length from political issues, so that decisions can be made on a technical basis and not for political reasons, Brander said in an interview.
“We think that it leads to better management when the managers are able to be managers and not politicians.”
Like Bernier, Brander has concerns about the connections between BC Hydro and the Premier’s office, saying it is too close for the appearance of good governance and integrity.
Premier’s Office Involvement in BC Hydro Media Relations ‘Very Rare’
While both experts said any government would want oversight of a project as large as Site C, the Premier’s office’s direct involvement in BC Hydro’s media relations is “very rare” and the close connection between BC Hydro and the Premier’s office “makes me uncomfortable,” said Brander, who personally believes Site C’s power will eventually be needed.
“Even if there is nothing wrong, it doesn’t look good if the managers of the Crown corporation are too close to members of the government, just for the sake of appearances. And appearances are important, because it’s very important that people believe that these governance purposes are honest and legitimate.”
BC Hydro Directors Closely Linked to BC Liberals
Brad Bennett, the Kelowna businessman Clark appointed in September 2015 to chair BC Hydro’s board of directors, was a chief advisor to Clark during her 2013 election campaign and toured the province with the premier.
In September, the BC Hydro board chair nominated Clark to run for the B.C. Liberals in the premier’s riding of West Kelowna. He spoke in Clark’s support as she was acclaimed and posed with the premier behind a “Re-elect Christy Clark” banner.
“We’re going to be heading into a [election] campaign in April,” Bennett told members of the B.C. Liberal Party and the community. “Our biggest enemy when things are feeling good isn’t the NDP necessarily, it’s apathy within our own ranks.”
Bennett is the president of McIntosh Properties Ltd., a real estate investment and private equity investment company that donated more than $30,000 to the B.C. Liberal Party from 2005 to August 2015, according to Elections BC.
He is the son of former B.C. Premier Bill Bennett, whose plans to build Site C in the early 80s were turned down by the quasi-judicial B.C. Utilities Commission, saying that B.C. did not need the power at the time.
It was at the former premier’s funeral last January that Clark made her vow to finish what Bill Bennett had started and hustle Site C past the “point of no return.”
Brad Bennett is also the grandson of W.A.C. Bennett, who built the first dam on the Peace River and named it after himself. W.A.C. Bennett planned the Peace Canyon Dam that, along with his namesake’s larger dam, supplies about one-third of BC Hydro electricity, and he also proposed to build Site C, the third dam on the Peace River, a designated B.C. heritage river.
The connections between BC Hydro and the Premier’s office extend further than the Bennett family.
Six of 10 members of BC Hydro's board or directors appear as donors to the BC Liberal party in the province's online political donations database — although it is possible the donations were made by other people with the exact same names.
The name of a seventh Hydro board member is listed as the principal officer for a company that donated to the Liberals. An eighth Hydro board member, Jack Weisgerber, is a former Liberal MLA who was the Minister of Energy and Mines in the Campbell administration and also worked as a BC Hydro consultant on Site C from 2007 to 2014.
BC Hydro’s CEO is Jessica McDonald, who served as deputy minister to former B.C. Premier Gordon Campbell — the person responsible for resurrecting Site C after BC Hydro’s board of directors announced in 1993 that the project would be shelved permanently because it was too expensive, too environmentally destructive and too damaging for First Nations.
Campbell’s government changed the law to exempt Site C from review by the watchdog B.C. Utilities Commission, which traditionally has examined power projects to ensure they are in the public interest.
While McDonald had no experience in the energy sector, she previously headed B.C.’s public service, managing 36,000 employees and overseeing an annual budget of $40 billion.
McDonald’s ex-husband Mike McDonald is Clark’s former chief of staff. He is heading the B.C. Liberal’s re-election campaign this spring, after leading their 2013 election campaign and Clark’s bid for leadership of the B.C. Liberal Party.
Mike McDonald is a senior associate at Kirk & Co., one of B.C.’s top communications firms, which received a six-year Site C contract for communications, consultation and community relations. (The contract ended in 2013, the same year that Mike McDonald joined the firm after working closely with them for the previous decade, according to the Kirk & Co. website, and prior to Jessica McDonald’s 2014 appointment as head of BC Hydro).
“I’m not sure if it’s not too close for comfort,” said Bernier, who directs the Centre for Research on Governance at Quebec’s National School of Public Administration.
“If we were talking about Prince Edward Island with 240,000 people living there, everyone is related to everyone. Is it necessary in 2017 in B.C. to be that close?”
In the absence of a demonstrated need for Site C’s power, Clark’s team talks mainly about the jobs that will be created by the $8.8 billion dam, which as the largest publicly funded project in B.C.’s history will be paid for with money out of British Columbians’ own pockets.
Clark’s Jobs Promises Coming Up Empty
Job creation has become an issue of paramount importance heading into the B.C. election campaign. Virtually none of the 100,000 jobs Clark promised in the Liquefied Natural Gas (LNG) industry have materialized and the premier’s much-touted jobs plan has failed to produce employment gains outside the Lower Mainland and Capital Regional District.
When Clark announced provincial Cabinet approval of Site C in December 2014, she promised, to little scrutiny, that the project would create 10,000 direct construction jobs.
By the end of November, according to BC Hydro, Site C employed close to 1,800 people, including in service jobs such as housing and kitchen work at the $470 million Site C workers accommodation facility in Fort St. John. About 650 of the workers were from the Peace River area.
Site C’s November employment tally includes more than 400 jobs in engineering and on Site C’s Project Team, including at BC Hydro’s head office in Vancouver, and more than 50 contract professional and office managers and supervisors.
BC Hydro said Site C will create “many more jobs” in the coming months and years, but how many of those will be construction jobs remains to be seen.
Clark has repeatedly said Site C will be delivered on budget, a statement questioned by former BC Hydro CEO Marc Eliesen, who called the project a “white elephant” and said it could have disastrous consequences for B.C. hydro rates, already in the middle of a scheduled 28 per cent increase over five years.
BC Hydro points out that B.C.’s electricity rates are still among the lowest in North America, saying that the planned rate increases are needed to replace aging infrastructure and invest in new projects to meet what the Crown corporation calls a “growing demand for power” in its communications materials.
The Joint Review Panel that examined Site C concluded that BC Hydro had not demonstrated the need for the dam’s power in the timeframe it presented, and recommended the project be referred to the B.C. Utilities Commission for an independent review of the need for Site C’s electricity and the project’s cost.
Image: Premier Christy Clark. Photo: Province of B.C. via Flickr (CC BY-NC-ND 2.0)