BC HYDRO has dramatically increased the cost of its Northwest Transmission Line, adding more than $150 million to the price tag when compared to previous figures.
The new figure is now $736 million, a massive jump over a price range released just this spring of between $561 million and $617 million.
BC Hydro has been steadily increasing the estimated cost of the 344km power line running north of Terrace since an initial figure of $404 million was suggested when the provincial government crown corporation first began planning construction in the latter part of the last decade.
Speaking last week, BC Hydro vice president Bruce Barrett said a large portion of the additional costs come from difficulties in clearing the power line’s right of way and in building roads to the right of way.
“Drilling and blasting alone is 10 times more than original estimates,” said Barrett in describing the challenge of going through more difficult terrain that first anticipated.
Contractors are building 205km of new road and improving 280km of existing roads to provide access to more than 1,100 sites where power line structures are being installed.
The line itself is approximately 344km long, stretching from BC Hydro’s Skeena Substation south of Terrace north to end at Bob Quinn on Hwy37 North.
Barrett also acknowledged time pressures in completing the line by next spring to meet contractual obligations to the power line’s first two major customers – Imperial Metals which needs power to run its Red Chris copper and gold mine now under construction and AltaGas which is building three run of river hydro projects to feed power into the line.
Red Chris is scheduled to be completed next spring and AltaGas has targeted the same time period to finish the largest of its three projects.
That’s meant working through the past two winters under not always ideal conditions, said Barrett.
At the same time, Barrett said BC Hydro’s costs have increased because of the high level of economic activity in the region.
Large scale construction projects such as Rio Tinto Alcan’s rebuilding of its Kitimat aluminum smelter and work on potential liquefied natural gas projects have created a shortage of people and equipment, causing prices to rise.
“We’ve had to bring in people and equipment from all over,” said Barrett.
“BC Hydro has not built a project of this size in a remote area for some time.”
The new transmission line figure of $736 million is part of BC Hydro’s adjusted service plan costing for its operations which will be officially released tomorrow as part of the provincial budget.
BC Hydro’s board has already approved of the new cost figure and has tacked on an additional $10 million as a reserve.
In previous cost estimates, BC Hydro has said figures were subject to a variance of plus or minus 10 per cent.
Despite the large increase, Barrett said the transmission line project has resulted in an economic jolt to the arm of the northwest, particularly with employment and business opportunities going to First Nations people and companies.
Calling First Nations hiring and business arrangements “unprecedented” in BC Hydro history, Barrett said the economic value to First Nations is more than $100 million.
He declined to release specific figures for the eight First Nations and for the Nisga’a Lisims Government who have benefitted from the transmission line crossing their traditional territories and, in the case of the Nisga’a, over Nisga’s core lands.
Clearing contracts have primarily gone to First Nations based on the transmission line route crossing their traditional territory and to the Nisga’a Nation for the route that crosses Nisga’a land.
Additional costs have also now been added to the transmission line budget which hasn’t been the case before.
Those include impact benefit agreements for First Nations and for the Nisga’a Lisims Government, a cost item that is not part construction work tied to the line.
And fish and wildlife habitat project costs to replace habitat affected by the transmission construction are also now included, said Barrett.
“What we did was create habitat off of the right of way,” he said.
Another additional cost item is a decision to increase the size of the cables called conductors through which the power will flow once the line is energized next spring.
Barrett said BC Hydro accepted a proposal to use thicker cables than called for in original design specifications for the long term economic benefit they will produce.
“What this will do is reduce the power losses [through the cables]. The line will now have more capacity,” he said.
And what that means BC Hydro will have the ability to sell more power to customers and also to take in more power from producers, Barrett added.