“I’m extremely disappointed — Site C is a monument to nineteenth-century technology”

Economic analyst Eoin Finn predicts Hydro rate increases from 11 cents to 27 cents per kilowatt-hour when dam is built

By Margot Grant

Monday’s decision to proceed with the Site C hydroelectric dam means Hydro rates will rise from the current 11 cents to 27 cents per kilowatt-hour by 2027, predicts Eoin Finn, retired partner with accounting consulting firm KPMG and campaigner against Site C.

“This decision will affect not only struggling households, but hollow out mining, forestry, oil and gas, tourism, cement, the entire industrial sector in B.C.,” he said.

Finn has examined large-scale business cases for 30 years, and believes the government’s argument is that $2 billion has already been spent on the dam, that remediation (undoing the work) would cost another $1.8 billion and that B.C. will get nothing for that money, while ratepayers will face an enormous rate increase next year.

Building the dam is like throwing good money after bad, he argues. “This is the sunk-cost fallacy, which you learn in Economics 101: the fact that a project has lost money does not mean you must spend more money on it.”

“And why would this amount have to be paid off in one year, like the government said this morning? It could have been paid off with a total rate increase of six per cent over 10 years, or a two-per-cent per-year increase over three years. Deferring the cost of something over 10 years is totally accepted accounting practise.”

“Rates have gone up 70 per cent in the last 10 years, so this would really not have been a big deal, especially when the alternative is an enormous rate increase from 11 to 27 cents in 10 years.”

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BC Hydro is teetering on the brink of insolvency, Finn said. “It has a deficit of $20 billion — why add another $6-8 billion? The rate increases necessary to restore BC Hydro to a healthy position will destroy the province. Large power consumers have already said that if the rates go up by more than 2.5 per cent per year, they will leave the province. Today’s decision will be borne by future generations.”

There is no demand for the power generated by Site C, Finn told The Coast Clarion. “BC Hydro sells its surplus power to the United States for a spot price of 3.5 cents per kilowatt-hour. Power from Site C will cost 11 cents per kilowatt hour. No business can survive very long producing something for 11 cents and selling it for 3.5.”

Today’s decision is the most financially reckless and silliest ever by a premier, Finn said. “This is much bigger than the fast ferries disaster, which cost less than $500 million but put the NDP on the opposition benches for 16 years.”

Finn reckons the politicians have been hoodwinked by the bureaucracy “to continue the business-as-usual Wild West of the former Liberal government.

“I can’t see a single rational reason for this terrible decision. Obviously, Premier John Horgan hoped for some political gain, but even he sounded doubtful this morning. I’m extremely disappointed. Site C is a monument to nineteenth-century technology. We could have done so much better.”