News

Mr. Patrick Wruck
Commission Secretary and Manager
Regulatory Support
British Columbia Utilities Commission
Suite 410, 900 Howe Street
Vancouver, BC V6Z 2N3

RE: Site C Clean Energy Project, PUBLIC Quarterly Progress Report No. 11

Dear Mr. Wruck,

BC Hydro has voluntarily provided the B.C. Utilities Commission with quarterly reports since the start of construction to be transparent about Site C's progress, accomplishments and challenges. Enclosed is the 11th Quarterly Site C Progress Report for the reporting period from January 01, 2018 to March 31, 2018.

I also want to provide an update to my October 04, 2017 letter to the Commission that acknowledged we would not meet river diversion in 2019 due to geotechnical issues and construction challenges. Over the past several months, we have worked diligently with our main civil works contractor to settle past issues resulting from that outcome.

I'm pleased to inform you that after a number of mon.ths of negotiations, we have reached a memorandum of understanding with our main civil works contractor on an updated contractual schedule – an important step in reaching our goal of achieving river diversion in 2020 and meeting the 2024 project in-service date.

The highlights of the Quarterly Progress Report include:

• Awarding three major contracts: generating station and spillways civil works, Site C substation, and powerhouse bridge and gantry cranes; and
• Launching the $20 million BC Hydro Peace Agricultural Compensation Fund to support agricultural production and agrifood initiatives in the Peace Region.

While the Site C project remains on time and within budget, in the report we acknowledge two areas of concern that impacted the overall health of the project: schedule and safety. For these reasons we classified the overall health of the project for this quarter as "red", or having serious concerns.

As noted above, we have worked hard over the past several months to improve our performance in these areas and since the reporting period, the overall health of the project has significantly improved and is now classified as "yellow," or having some concerns.

The first area of concern was related to the project schedule and the ongoing efforts to resolve various issues with the main civil works contractor that I referenced earlier. Last month, we reached a memorandum of understanding with the main civil works contractor.

The memorandum of understanding includes:

• a contractual schedule that achieves 2020 river diversion and keeps us on track to meeting the 2024 project in-service date;
• accelerating a number of critical construction activities and purchasing some additional key equipment;
• numerous incentive payments to the contractor if and when they meet critical project milestones; and
• a settlement of past issues that arose prior to May 31, 2018 and were described in my October 04, 2017 letter.

The total potential cost of the agreement over the life of the project is $325 million.

While the agreement will draw on our contingency budget from the main civil works contract, we have been able to manage the costs within the existing construction budget. Therefore, there is no impact to the overall project budget.

The final contractual agreement between BC Hydro and the main civil works contractor is expected to be complete later this month.

The second area of concern was about safety performance on the project. During the reporting period there were two lost time injuries, six medical attention treatment injuries and five near-misses – an increase from the previous quarter.

As you know, BC Hydro prides itself on its commitment to safety and we have taken steps to increase the focus on safety at site, with the goal of preventing all injuries. We have been working closely with all of our contractors in the development of a plan to improve safety performance.

During the reporting period, BC Hydro also developed its own plan to achieve the safety results we want. As part of that plan, we have implemented a senior-level safety steering committee with all prime contractors to address shared safety issues and opportunities. We're also hiring a permanent senior field safety manager and are regularly holding on-site safety conferences to improve the project's safety performance and culture. The contractors have confirmed their commitment to safety as well and developed plans to improve their performance.

With an agreement in place that resolves prior issues with our main civil works contractor, a revised contractual schedule that meets 2020 river diversion and a strengthened project team with independent oversight from EY Canada, BC Hydro is in a stronger position to deliver Site C within budget and on schedule for 2024.

Today, with the measures we have taken over the past several months, the overall health of the Site C project has returned to "yellow."

Sincerely,

Chris O'Riley
President and Chief Operating Officer

Site C Quarterly Progress Report No.11 [PDF, 1.9 MB]