AAA rating

One of Moody’s concerns is the increasing debt burden of Site C:

At the heart of the matter is a simple error in finance theory by the BC government. BC Hydro is a wholly owned subsidiary of the province. It will spend at least $10.7 billion dollars by 2024 on Site C. These dollars are financed (many have already been financed) by provincially backed debt. Moody’s is concerned about the rising level of debt. Citizens of British Columbia are concerned about the additional $8 billion that the government plans to spend on an asset which could be replaced for $4 billion using renewables such as wind, solar and geothermal. READ MORE


Chief Roland

January 16, 2018 : West Moberly and Prophet River first Nations Launch Civil Actions for Treaty Infringement and Injunctions to Stop Construction of Site C. Read more 


Sadly, the most important issues were not addressed — the availability of billions of dollars from the sale of the Columbia River energy and capacity the province has in the U.S., or the use of the Non-Treaty Storage to firm renewables. Both issues are game changers and likely to remain unused given BC Hydro’s current plans.  READ MORE:


Peace Valley families are facing Christmas with the imminent threat of losing their homes to Site C & they bear the weight of bills from experts hired to protect us all from this unnecessary project. Please ease their burden by donating here.



Comment: Site C continues on premier’s faulty arguments

Premier John Horgan had an opportunity to protect British Columbians from a huge financial burden. He failed to do so. Instead, on Monday he announced that his government would complete construction of Site C.

Continuing with Site C is a bad decision on so many levels. What’s worse is how low Horgan had to stoop to try to rationalize it. He engaged in irresponsible fear-mongering, the logic of which does not stand up under scrutiny.

Horgan claims that “to cancel [Site C] would add billions to the province’s debt — putting at risk our ability to deliver housing, child care, schools and hospitals for families across B.C. And that’s a price we’re not willing to pay.”

What utter nonsense.

The cost of cancelling Site C can readily be managed without affecting the provincial budget or imposing price hikes on ratepayers. Even Horgan’s briefing notes explain that the $4-billion cost of cancelling the project and remediating the site can be written off in B.C. Hydro’s accounts over 70 years — as it should be. There would be no rate shocks, increased burden on the province’s debt or negative impact on social programs.

Horgan’s unsupported rationalization for continuing Site C rings even more hollow when compared with his government’s explanation of how readily a onetime accommodation of $3.5 billion was absorbed into the provincial accounts when Port Mann Bridge tolls were eliminated. There was no warning that this debt might crowd out the government’s ability to borrow for important social infrastructure or lead to a credit-rating downgrade. Just the opposite.

Budget 2017, released in September, states that despite “this $3.5-billion onetime shift … taxpayer-supported debt-to-GDP ratio remains relatively low.” B.C.’s debt to GDP ratio is the third lowest among provinces in Canada.

If Horgan were really concerned about the financial impact of Site C on taxpayers and ratepayers, as he says he is, he would have cancelled the project. He had all the information he needed in the report prepared by the independent regulator — the B.C. Utilities Commission. Any reading of the commission’s work confirms that, based on economics and finance, Site C should be terminated.

The commission was not convinced that B.C. needs the electricity from Site C over the time horizon forecasted, and further indicated that even if we did, there are renewable alternative-energy supplies that are less expensive and more effective than Site C.

Site C is only two years into a nine-year project. The commission determined that costs had already escalated so dramatically that the project is no longer on budget or on schedule. In Horgan’s announcement, we learn that costs have further escalated by almost $1 billion. Project costs are $10.7 billion, up from the $8.7 billion when the project was announced in 2014.

Site C’s construction schedule and budget are following in the footsteps of Muskrat Falls in Newfoundland and Labrador. A judicial inquiry has recently been established to look into that boondoggle.

British Columbians have to be aware that this decision to go forward is much more expensive than a decision to stop the project and book the losses. There will be higher hydro-rate increases in the future by continuing construction than by terminating the project today.

Despite Horgan’s rhetoric, Site C is not beyond the point of no return. Horgan will rue the day he did not stop this madness when he had the chance.

Marc Eliesen is the former president and CEO of B.C. Hydro. He was an expert intervener in the BCUC Site C inquiry, and has served in executive positions throughout the energy sector in Canada, including chairman/CEO of Ontario Hydro and chairman of Manitoba Hydro.


Delivered by Hand

December 14th, 2017

Auditor General Carol Bellringer, FCPA, FCA
Office of the Auditor General of British Columbia
623 Fort Street, Victoria, B.C.
V8W 1G1

Dear Auditor General Carol Bellringer,

Re: Present and Future Financial Impact on BC Ratepayers and Taxpayers of Completion vs. Cancellation of Site C 

We are writing you on behalf of the Peace Valley Landowner Association and the Peace Valley Environment Association to request that you initiate an urgent examination pursuant to Section 13 or other applicable provision of the Auditor General Act to answer the following questions:

  1. Is the attached December 11th, 2017 memorandum prepared by McCullough Research correct? (Attached, below.)
  2. Is it true that if the BC government abandoned the Site C project, British Columbia would have no alternative but to incur an immediate $3-4 billion public charge on either BC Hydro ratepayers or BC taxpayers? Please refer to the attached statement of Attorney General David Eby. (Attached, below.)
  3. What is the likely minimum cash impact on present and future BC Hydro ratepayers and BC taxpayers of completing Site C vs. cancelling Site C?
  4. What mitigation measures are available through policy, legislation or regulation to minimize the cashflow impact of cancellation of Site C on BC Hydro ratepayers or BC taxpayers?
  5. What viable options does the British Columbia government have to ameliorate the accounting (as opposed to cashflow) treatment of Site C cancellation costs?
  6. Is the best practice to exclude or include sunk costs when deciding whether or not to complete a project such as Site C?
  7. Should accounting treatment be the decisive factor when considering whether or not to complete a project such as Site C?
  8. Other questions you deem relevant to determining whether or not the BC government is acting in an effective, economic and efficient manner with respect to Site C.

This requested examination is in the public interest because the now $10.7 billion Site C project is the largest capital infrastructure project in the history of BC and there is a fundamental difference of opinion on the potential financial impacts of moving forward with Site C vs. cancelling Site C.

These questions fit well within the overall terms of reference for your Site C dam review which we understand was placed on temporary hold pending the outcome of the British Columbia Utilities Commission Site C Inquiry.  The purpose of your review is summarized in the following way, “…explain to the legislature and the people of British Columbia the information and analysis provided to government, the progress and costs to date, and the potential impacts moving forward”.  In order to fully understand the potential financial impacts moving forward it is necessary to be able to compare those financial impacts to that of cancelling the project.

As an independent officer of the legislature, all British Columbians rely on your examinations and reports  to be assured the British Columbia government is achieving its objectives effectively, economically and efficiently.  At its core, the BC government is asserting that the only effective, economic, and efficient way to meet demand for electricity in the 2030’s is to spend a further $8.6 billion (assuming no further cost overruns) to complete Site C.  And that effective government decision making requires that the accounting treatment of project costs is and should be the decisive factor.

Respectfully, we request that this matter be treated on an urgent basis.  While this project is only 20 per cent complete, we understand that costs are incurred to the tune of $60 million per month.  Given the scope of the questions, the previous work completed by your office, and the inquiry recently completed by the British Columbia Utilities Commission, we are hopeful the interim results of your examination  and responses to some, if not all, of the above questions will be publicly available in January 2018.

Thank you for considering our request. We look forward to your early response. Please contact me if you have any questions or require further information.


Cc:       Morris Sydor, MBA, CPA, CA, Assistant Auditor General
Peace Valley Landowner Association and Peace Valley Environment Association
McCullough Research

Click here to download the original letter in full.

Click the image below to download the December 11th, 2017 memorandum prepared by McCullough Research:

Click the image below to download the statement of Attorney General David Eby:

Click the image below to download the Province of BC sample bond for$500,000,000 worth of 2.55% Bonds, dated October 17, 2017:

For all past reports go to

After the decision to proceed with Site C was announced yesterday by the BC NDP, David Eby, BC’s Attorney General wrote a letter explaining the decision. In an nutshell, he says that the construction (sunk) costs to date, combined with the anticipated costs of remediation, would be put on the province’s books immediately, thus increasing the debt of the province so significantly that it would reduce our credit rating (thus increasing borrowing rates) and leave absolutely no money available for any other projects throughout the province.

International energy expert, Robert McCullough immediately responded, emphasizing that Eby and the BC NDP were clearly unaware that the BC Utilities Commission (BCUC) had set amortization periods for sunk costs and reclamation expenses. Their advice was that a 70-year amortization period should be used for the sunk costs of $2.1 billion and a 30-year amortization cost be assumed for the reclamation costs (which have been estimated by BC Hydro to be as low at $1 billion and by the BCUC to be possibly as high as $1.8 billion).

Following is the email from David Eby, BC’s Attorney General, explaining the rationale for the decision to continue with Site C rather than cancel it and following that you will find a link to the response from expert Robert McCullough.

From: Eby.MLA, David []
Sent: Monday, December 11

Thank you for writing to me about the Site C dam.

As you know, for several years I have been a critic of the Site C dam project. The previous government’s enthusiasm for this hydro project failed to recognize the massive and disruptive changes taking place in electricity generation and distribution, proposed consuming billions in public spending for power demand that is at best uncertain, pushed ahead over the objections of at least one First Nation in the area, and shrugged at the destruction of valuable farmland in the Peace.  Given that this megaproject was well underway in May, and that there was little transparency about what was going on at Site C, during the election we committed to send the Site C project for review to the BC Utilities Commission for advice on how to move forward given that the previous government had avoided any oversight to date.  The Utilities Commission reported back to us, and to the public, that in their opinion terminating Site C and implementing a portfolio of alternative generation technologies would have comparable public and ratepayer costs to continuing with the Site C project.

That was very hopeful news.  In response, our government took the Utilities Commission’s information to experts in finance for analysis about what options were available. 

Devastatingly, at this stage we received unambiguous advice that while the net cost of the termination and continuation scenarios may be similar, the accounting treatment of the two models was dramatically different. In particular, we were told that if we abandoned the Site C project, we would incur an immediate $3-4bn public charge on either hydro ratepayers or BC taxpayers. 

In contrast, we were advised that if we continued the project, even if it went significantly over budget, the accounting treatment of the completed project as an “asset” would enable it to be repaid over 70 years by ratepayers with a significantly different impact on rates and public accounts.  There were two options we examined in a termination scenario: funding the termination charge through public accounts (taxpayers), or funding the termination charge through BC Hydro (ratepayers). In either scenario, the real world implications of the financial advice we received were dramatic.

For the first option, public financing of the immediate $3-4bn charge would mean $125-150m in new annual debt service charges, effective immediately on termination. This charge would eliminate  spending room for promised progress on childcare and many other government and public priorities. Public financing of termination would similarly mean that billions in capital funding currently intended to be spent on hospitals, school seismic upgrading, and other critical public infrastructure like transit would be consumed entirely with no matching asset created. If we proceeded with our capital spending plans despite incurring this charge, our debt rating would change as well, bringing with it additional increased interest charges.

Leaving the $4bn charge with Hydro so ratepayers could finance it, with no matching “asset” was no better. This approach would result in an acute risk that Hydro’s debt would no longer be considered “commercial” by bond raters and/or BC’s Auditor General who has already cautioned about BC Hydro’s books which already overburdened by debt.  If BC Hydro’s debt was no longer deemed commercial by analysists, this would result in BC Hydro’s entire debt being seen by bond raters and BC’s auditor general as government debt. The financial impact of that more than $10bn in debt moving on to public books overnight would be catastrophic for any hope of building the kind of province we need to build.

The decision to proceed with the Site C project taken by our government today is not a happy one.  The strategies of the previous government to avoid oversight and push the project “past the point of no return” with the hope, achieved, of visiting financial ruin on the books of any government that would seek to cancel it, are unforgivable.

Thank you for writing to me about this important issue. I brought your voice to Victoria to speak against the project, and in favour of terminating. However, the costs of termination were ultimately too high for a government committed to making life better and more affordable for British Columbians. I hope that, while you may not agree with the decision, you may now understand how it was reached.

Yours truly,

David Eby

Response from Robert McCullough here: 20171211 Response to MLA Ely 3 RM.
Additional reports from experts Robert McCullough and Harry Swain, former chair of the Joint Review Panel on Site C.
Robert McCullough made it very plain in his final letter that it is in fact cheaper for the NDP to cancel, to the tune of $266 m a year.
Harry Swain gave a timely press conference explaining that cancelling was not an economic risk.
A few days after that press conference, when cabinet members were still saying our credit rating would be downgraded if we cancelled, Harry Swain weighed in again on that particular question, and Damien Gillis printed it in Commonsense Canadian:
Further Also of course there is the Fact vs. Fiction piece, which addresses the negative influences associated with the economic decision to proceed with Site C as well as clarification of the facts that should have influenced the decision to cancel the project: