Site C capital cost estimate tabled at $8.335 billion

The Site C capital cost estimate is tabled for $8.335 billion. It’s an increase over the $7.9 billion that was initially presented in 2010 and the increase comes as a result of “cost refresh” performed by B.C. Hydro this year to reflect “the advanced stage of project design and to prepare for a final investment decision by government.” The government has also established a reserve of $440 million to allow for cost overruns outside of B.C. Hydro’s control. The reserve which would cover things such as higher than expected inflation, and interest rates is subject to provincial Treasury Board approval.

After the process was completed it was revealed that while has costs had escalated as a result of a longer environmental assessment process, enhancements to worker accommodation and larger diversion tunnels, the increases were offset from savings that came from lower than expected interest rates, design efficiencies, and a reduction in excavation requirements.

The increase in the two figures reflects two key points: Costs associated with changing to an HST format to the provincial sales tales, and a construction start date of the summer of 2015.

A release from the Province states that if the capital cost estimate had not been updated to reflect the change from HST to PST that Hydro would have been forced to use funds from the project contingency budget. The Province felt it was for the best to increase the capital cost to account for the change to allow for full contingency.

Construction on Site C was expected to have started in January of next year. Delaying construction until the summer will allow for more time to finish the permitting process. As a result the revised start date creates an increase in the construction period which in turn increases inflation and interest costs.

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