One of Moody's concerns is the increasing debt burden of Site C:
"Further, BC Hydro’s debt is expected to continue to rise over the next several years as the utility moves forward with the construction of the Site C hydroelectric dam with a recently revised cost estimate in excess of CAD10 billion (revised from the previous CAD8.3 billion). With the provincial government’s recent decision to move ahead with the construction of the project, the anticipated increase in debt continues to pressure the province’s rating since it increases the Province’s contingent liability." - Moody's Investors Service
It should be noted that this comes in direct conflict with Deputy Minister of Finance Lori Wanamaker's claim that Site C cannot be replaced by less expensive and less risky alternatives since it might threaten BC's AAA bond rating:
"BC Hydro’s plan is to significantly reduce the balances in its non-Site C regulatory accounts over the near term. Adding nearly $4 billion of sunk and termination/remediation costs for Site C recovered over the longer term (with no revenue producing assets to show for it) would exacerbate that plan and highlight increased risk of credit rating erosion by rating agencies."
- Lori Wanamaker, Deputy Minister of Finance
At the heart of the matter is a simple error in finance theory by the BC government. BC Hydro is a wholly owned subsidiary of the province. It will spend at least $10.7 billion dollars by 2024 on Site C. These dollars are financed (many have already been financed) by provincially backed debt. Moody's is concerned about the rising level of debt. Citizens of British Columbia are concerned about the additional $8 billion that the government plans to spend on an asset which could be replaced for $4 billion using renewables such as wind, solar and geothermal. The government's disagreement with the BCUC over the timing of rate increases is interesting, but largely irrelevant, since the citizens of British Columbia are on the hook for the incremental $8 billion that they will pay through their taxes or electricity rates, when they could pay far less, about $4 billion, if a less risky choice was adopted. Cancelling Site C therefore reduces, not increases, the risk of a credit downgrade by Moody's. Ken Boon President, Peace Valley Landowner Association
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