Vaughn Palmer: Hydro ‘shocker’ isn’t the first time project wires got crossed

VICTORIA — Energy Minister Michelle Mungall reacted strongly Wednesday afternoon to the news of a $100-million loss for B.C. Hydro in a contract dispute over construction of a major transmission line.

“I’m not happy,” Mungall told me outside the legislature chamber. “It’s a lot of money.” Money that could have been used for other, better purposes, she added.

She was referring to Hydro ending up on the losing side of an arbitration with the prime contractor on the Interior-Lower Mainland transmission line, a 247-kilometre-long upgrade to the provincial power grid, stretching from Merritt to Coquitlam.

The project was troubled from the outset, including delays brought on by failure to properly consult First Nations and problems with sub-standard steel that led New Democrat Adrian Dix to dub it “Fawlty Towers.”

At one point, Hydro became so frustrated with the contractor, it took back control of a section of the line near Spuzzum and built that stretch itself.

The utility and the contractor, the Flatiron-Graham Joint Venture (FGJV), remained at odds when the line was up and running in the fall of 2015, a year behind schedule and well over the initial cost estimate.

That led to the arbitration, which concluded with an award in favour of the contractor that Hydro pegs at $95 million to $105 million, including interest. The total is still subject to clarification and possible appeal.

The arbitrator found Hydro responsible for changes in the project and for issues related to access to private land and archaeological sites along the route. FGJV was awarded additional contract payments for delays, disruptions in the construction schedule and loss of productivity.

By way of consolation, Hydro noted the final award fell well short of the full claim by the contractor, “ranging in value over time from $285 million to $360 million.”

Still the decision was punishing enough. The line was initially costed at $602 million when first included in the provincial capital plan back in 2009. When completed in the fall of 2015, the cost was put at $723 million.

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The arbitration award would push the all-in cost high as $828 million, 38 per cent over that initial figure from 2009.

In reaction, the NDP minister of course noted that the overruns and …read more

Source:: Vancouver Sun – Politics

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