BC Hydro has a long, proud history of building electricity infrastructure efficiently
Once again, we're taking on an ambitious capital program, valued at nearly $4 billion
From the 1960s to the '80s, BC Hydro had shovels in the ground in most parts of the province. We built big dams and generating facilities in the North and Columbia and hundreds of kilometres of high-voltage transmission lines that traversed rugged mountains and coastal forests to bring power to rapidly growing communities across B.C.
Today, we're grateful that generation had the foresight to build these capital projects, but if you read the newspapers back then, you'd find no shortage of critics questioning their necessity and cost.
These were legitimate questions then and remain so today, as BC Hydro is once again undertaking an ambitious capital program – rebuilding and expanding our aging electricity system to ensure we can continue to power B.C. homes and businesses safely and reliably, and promote economic growth that benefits us all.
Most projects on time, on budget
BC Hydro has a strong track record of managing a wide portfolio of capital projects. The vast majority are completed on time and on budget. Three recently completed projects – the addition of a turbine at the Revelstoke powerhouse, new spillway gates at the Stave Falls dam near Mission, and the new Columbia Valley transmission line – came under budget by close to $90 million in total.
Most of our large capital projects now under construction – valued at nearly $4 billion – are tracking at or under budget. They include:
- Interior to Lower Mainland transmission line
- Vancouver City Central transmission project
- Two new turbines at the Mica generating station north of Revelstoke
- Replacement of five turbines at the G.M. Shrum generating facility near Fort St. John
- Our smart metering program
- Upgrades of the Ruskin dam and powerhouse near Mission.
Learning from the Northwest Transmission Line
In the case of the Northwest transmission line, BC Hydro shares concerns about the $736 million cost for this project. Clearly, we underestimated the challenges of this particular project and didn’t have sufficient early warning systems to identify the additional costs.
We have learned from this project and will ensure in the future that we identify potential cost pressures earlier in our projects' lifespans so that we can take appropriate action.
It’s also important to note that some of the costs of this project will be offset by contributions from the federal government and the private sector, as well as future industrial customers who will benefit from the line and pay a significant portion of the capital cost through a tariff approved by the British Columbia Utilities Commission (BCUC) earlier this year.
Transmission line fuels economy, boosts First Nations
In the long run, the benefits of the Northwest transmission line will far outweigh the cost – just like those big power projects built decades ago. It will bring electricity to an area north of Terrace that was off the grid, powering mining and other industries, and create new jobs in resource-dependent communities.
In particular, the project provides valuable skills training for First Nations. The line runs through Nisga'a Nation settlement lands and the territories of eight First Nations. In a ground-breaking partnership, we're using First Nations contractors to clear more than 300 kilometres of right-of-way and build more than 200 kilometres of access roads, working in unforgiving terrain and extreme weather.
We constantly search for project efficiencies
We strive to set realistic cost estimates for our projects, but it is not unusual for early estimates to later change as projects are defined and built. Like all businesses, we face changing prices for commodities such as steel, competition for labour, and currency fluctuations that can dramatically alter the cost of big-ticket items such as turbines.
Sometimes we benefit, as was the case with the Vancouver City Central transmission line, when the economic downturn of 2008 allowed us to negotiate better deals with suppliers and contractors. Setting budget estimates so high that projects always come in below forecast would make for better newspaper headlines, but frankly over-estimating would be poor project management.
We never stop looking for more efficient ways to manage our capital projects. The replacement of the John Hart generating station in Campbell River, for example, will be built by a private-sector partner to be chosen through a highly competitive procurement process.
This private partner will be responsible for any cost overruns or schedule delays, as well as a 15-year performance warranty. The BCUC reviewed and validated the proposed management of this capital project earlier this year.
For more than 50 years, BC Hydro has been powering B.C. homes and businesses by building and maintaining a vast, province-wide electricity system. Transmission lines, dams and generating stations can last indefinitely with regular maintenance, so the benefits of BC Hydro's capital program today will be long-lasting for generations to come.
– Charles Reid, President and CEO, BC Hydro