HAPPY VALLEY-GOOSE BAY – An expert on hydroelectric megaprojects has told the Commission of Inquiry Respecting the Muskrat Falls Hydroelectric Project that it is common for such projects to be developed with understated early cost estimates.
Bent Flyvbjerg of Oxford University is the inquiry’s first witness. Based on his expertise, he was actually tasked with developing a report for consideration by the inquiry. It was co-authored with Alexander Budzier. The report is based on a study of 274 hydro dam projects around the world, including projects in Canada.
“This is the largest academic data set (of its kind) in the world,” he testified.
The report states the hydroelectric dam projects are high in risk, “with an average cost overrun of 96 per cent (median 32 per cent) and an average schedule overrun of 42 per cent (median 27 per cent).”
The issue of risk and overruns has been consistent for dam projects over the last 60 years.
This risk in hydro projects is, the report’s authors stated, only exceeded by the risk in nuclear projects.
The report states the root cause of cost and schedule overruns is found in optimism and political bias in cost estimates, leading to an early understatement of real cost.
“Optimism bias and political bias are both deception, but where the latter is deliberate, the former is not. Optimism bias is self-deception,” the report states.
In the bias involved with hydro megaprojects, Flyvbjerg said Canada is not unique.
Quick opening from commissioner
The first witness followed brief opening remarks from Commissioner Richard LeBlanc, who said he wanted to allow for as much time for the witness as possible, as the witness is only available for the day.
But in his brief opening, LeBlanc emphasized the inquiry is not a trial, but he hopes to be able to provide essentially the story of the Muskrat Falls Project.
He issued a special recognition to the significance of the province to people in the area, saying up front once again that there are areas he will not be addressing as part of the inquiry. Decisions around the need for further mitigation related to methylmercury concerns would be one.
LeBlanc also said he plans to get into some areas as part of his review where evidence may not be released to the public as it is entered. This includes a look at water management on the Churchill River, something he said would “possibly” impact water flow on the Churchill River and hydro dam management.
There is a case related to water management still before a Quebec court, and LeBlanc said he would not want to act against the public interest as the province pursues that case.
