BC Hydro President and CEO Jessica McDonald was in Fort St. John Friday, April 22, to tour the Site C dam site, sign the Site C community measures agreement with the City of Fort St. John, and help cut the ribbon on the city's new micro-hydro station in the Old Fort neighbourhood.
McDonald sat down with the Alaska Highway News following the signing of the Site C agreement, to talk Site C, power sales with Alberta, and the recent Moody's report on BC Hydro's debt load.
Since we last spoke, what work has proceeded on selling more power to Alberta?
Well, we already do sell power to Alberta. That's not new. But the idea is, as you know, as Alberta transitions off coal and to cleaner resources, there is an opportunity that both jurisdictions recognize has real potential. So, there are discussions underway between Alberta and B.C., those are at the government level, so I encourage you to follow up with Minister Bennett in terms of more detail. But I can confirm for you that those conversations are underway and that both jurisdictions really recognize the potential here.
Has a memorandum of understanding (MOU) been signed between the two provinces?
The discussions first need to explore what all the various opportunities are and, as you know, there's been references to a new intertie or restoring the full capacity of the existing intertie. So it's important for initial conversations to look at what the range of possibilities are and what the right mix of benefits would be that would point to the right solutions. So, you know, talks are very meaningful and underway.
So no MOU has been signed?
I would like you direct your questions to government. BC Hydro is not the lead. We're very much involved as a key player, but the discussions are between the two governments.
You're talking about exploring and discussing the possibilities with Alberta. What possibilities do you see?
Once again, we know the benefit of being trading partners, that's something that's always existed and there are solid relationships between B.C. and Alberta in terms of trading power. We recognize their system is different from ours, and the flexibility that's inherent in our system has always made it possible for us to step up and fill the gaps as Alberta has needs. It's already proven to be true that the two jurisdictions can fit each other well in terms of trade opportunities. There's no question that we can build on that, it's really a matter of figuring the limits of what can be traded today and what makes sense in terms of expanding that potential.
Some have pointed out that Manitoba and Alberta already have a power sales MOU in place. Are you concerned that other provinces might leapfrog B.C. and the opportunity for BC Hydro on this file?
No. I think it makes sense for neighbouring jurisdictions to be talking to each other. I have to assume there's some discussions with Saskatchewan between Manitoba and Alberta. But I think it makes sense for jurisdictions to be talking in all directions. Our strongest trade relationships, our most productive trade relationships, are north-south. But that doesn't preclude us from (trading) east-west as well and it makes sense for me that every jurisdiction is talking on either sides of themselves about where the opportunities are to find maximum benefit.
The Muskrat Falls dam on the other side of the country in Labrador has been in the news again. It's CEO just stepped down. That's a project that's had a lot of difficulty in terms of meeting its timelines, its budget, and there's real concern about the management of that project. Are you keeping an eye on that project, and how are you trying to avoid the problems that are plaguing Muskrat Falls from happening with Site C?
We're always looking at comparative experiences with other utilities across Canada and throughout the Pacific coastal region in terms of efforts that are being made to expand operations in different ways and we learn from each other all the time. That's absolutely critical. For the Site C dam, which is the obvious parallel, we have absolute discipline and rigour in terms of the systems that we've been building for delivering that project on-time and on-budget.
I'm very pleased with where that project is at. Coming to the end of the first year, with many of the most significant procurements now resolved and awarded, there's significant de-risking of the risks that we've been tracking for the project. It gives us great confirmation that our budgeting was appropriate for the project. We've managed to work through the foundational issues that arise in the first year very solidly and the project is in excellent shape. So yes, we always watch the experience of others, but out work on the Site C project has given me great confidence in the planning that was done to enter into the construction of it.
You toured the dam site Thursday. Since the last time you were here, how have you seen the construction there progress?
Very impressed with the work of both the BC Hydro project team and the contractors that are on site. There's a lot of diligence in terms of how the work has been approached and is progressing. Work is being co-ordinated well with multiple contractors on site. I stayed myself in the camp the last two nights and experienced the dining mess hall and the actual living quarters workers will be in. I very much like to get that first-hand experience myself in terms of the project and what's happening.
The Premier was in town on Wednesday, April 20, and we had an opportunity to sit down for a one-on-one with her. We did follow up on talk that Site C would be the last major dam in B.C. She expanded that a little bit further. She predicted it would the last major dam of its kind in Canada. She feels these types of projects are becoming increasingly difficult to build because of opposition to these type of projects. What do you think?
Speaking for BC Hydro, it is the last major dam that we plan for our system. It's an important choice and its been a difficult choice with a lot of study, a lot of careful thought into whether or not this is the right project for us right now. But it will be the last dam for our system. It's an important thing to recognize. I can't speak for other jurisdictions and the plans that they will have. Manitoba and Quebec have large hydroelectric backbones in their system like us. What they will choose in the future I can't speak to. But for British Columbians, in our context, this is our last major dam.
I'm sure you've read the Moody's report and it's maintained Hydro's credit rating. But it did have concerns about the debt Hydro is taking on for the dam. What is your comment on the report?
I would say they recognized our capital program, which is significant over the next 10 to 20 years in refurbishing and expanding our system. They've recognized that has an aspect of additional debt. The assets begin to be paid down once they're in operation. So in this time period, where in any given year we have between five- to six-hundred capital projects on the go inside BC Hydro, they recognize that requires financing. They also recognize this is a very stable organization that has the ability to carry that debt and that there are systems and planning in place in order to pay that down in a planned way and over a defined time period.
So I think it's expected that they would look at that and comment on it and note that fact. But it hasn't effected the province's credit rating, and if anything it's reconfirmed the view that BC Hydro is certainly able to carry the debt it has planned as part of this program.