Friday, February 11, 2011

Big Becky’s budget gets bigger

Tunnelling costs jumped from $600-million to $1.2-billion
By Parker Gallant

Ontario Energy Minister Brad Duguid was in Niagara Falls this week with a local MPP and a school bus of media types to deliver a message. “You can’t build a tunnel like this for free,” he stated, referring to Big Becky, the nickname of the machine boring a 10-kilometre tunnel under the city of Niagara Falls to bring more water to the Sir Adam Beck hydroelectric generators.

At least that part of the message was factual. The Big Becky project is $615-million over budget — at least 60% — and will be almost four years late when it finally delivers some hydroelectric power. By that time Ontario’s electricity rates, according to the same minister, will be at least 25% higher.

While the Ontario Liberals claim credit for Big Becky because they approved the original budget of $985-million in 2004, the plans for the tunnel had been in the works for a couple of decades and detailed engineering work had actually started in 1990. Its environmental assessment was actually approved in 1998. At the time, Ontario didn’t need the power, so the project was deferred.

When the McGuinty government came to power, it announced it would close all of Ontario’s coal-fired generating plants by 2007. At the same time, several of the province’s nuclear plants were nearing their end of life and concerns that Ontario could face an energy shortage crystallized in the minds of Ontario Power Generation, the provincial utility, and the Liberals. Plans for Big Becky were dusted off and rushed through the OPG board. The Request for Proposal was sent off quickly for bids to complete the tunnel.

The original approval was for a budget of $985-million, but that ballooned when the contractor hired to drill the tunnel sought a huge adjustment, on the grounds that OPG’s RFP was flawed in its provision of geological information. As a result, the tunnelling costs jumped from $600-million to $1.2-billion. No announcements on this huge increase were made by then energy minister George Smitherman — it was simply run through the Liberal Cabinet and the overrun was blessed, along with the completion delay. A search through the notes of OPG’s financial statements disclosed what had happened.

As the delays in completion became known and OPG was struggling with nuclear refurbishments, alarm bells started ringing in the corridors of the electricity sector and among the Liberals. A power shortage would be a very bad event. McGuinty then backtracked on closing those “dirty” coal-fired generating stations, and their life was extended to 2014.

Smitherman rushed through the Green Energy Act, instructed the Ontario Power Authority to pay generously for renewable power, and Ontario now finds itself faced with electricity rates that are 75% higher than 2003 and that are projected to be 46% higher by 2015.

“A hundred years from now, the project will still be contributing to our energy system,” said Duguid. “It’s clean. It’s reliable. It’s something I think Ontario families will be able to take a great deal of pride in.”

In 100 years, perhaps they will.

Financial Post
Parker Gallant is a retired banker who looked at his electricity bills and didn’t like what he saw.

Read more:


[RW] Except wind turbines won't last 20 years, let alone 100.


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