Tuesday, March 22, 2011

Bipole III nearly doubles in price.

It has been reported that the Bipole 3 project, the new Manitoba Hydro line the government plans to construct along the West side of Lake Winnipeg will cost over $4.1 billion, nearly twice as much as the projected $2.2 billion that Manitoba Hydro and the provincial NDP had told the public.  When pressed for answers, Hydro president and CEO Bob Brennan was more concerned about why someone in his company would leak out this document, than to justify the enormous cost of running Bipole 3 on the West side of Lake Winnipeg.

One of the first blogs to question Hydro's decision nearly a year ago, is the much respected author of  "Anyone Want a Peanut".  If you click on the link, he has an excellent write up on why running the Hydro line on the West Side is a horrible idea, and reeks of political maneuvering, rather than common sense.  Apparently,  the west route is technically inferior to the east route, including the need for additional (expensive) converters, lower line capacity, and greater line losses.

Here is a projected map of Bipole 3:


What's interesting to note is reliable sources have told me that if the line was built on the East side of Lake Winnipeg, it would only have a width of 66 metres, run parallel (for the most part), to an existing gravel road, and would arguably have less of an environmental impact than if it were to be built on the West Side of the lakes. Finally, let's not forget about the open letter that 19 mainly retired senior professional engineers composed for the Winnipeg Free Press back in December 2010

Here are some of the main points the engineers brought up in regards to Bipole 3 in the article:

  • Of the 10 criteria for designation of the East side of lake Winnipeg as a World Heritage site, nothing precludes carefully positioned roads and transmission lines (many World Heritage sites in Canada, for example in Banff and Jasper, are crossed by transmission lines and main highways)
  • Land owners who will be critically affected by the western route  have raised objections to the government's directive the western route must be followed
  • The directive was apparently made with little or no public input and no reasoned comparison of costs and benefits
  • Environmental studies show a common corridor that includes the road and the Bipole III, is favourable for wildlife. It will also allow access for periodic inspection and maintenance of the line.
  • A 66-metre-wide right-of-way will occupy less than 0.03 per cent (three ten-thousandths) of the projected heritage area
  • With a length of 1,365 kilometres, the West side route is 480 kilometres longer than the East side route, and this is the primary reason for the increase in costs
  • Selection of an east-side route would save a Manitoba family of five around $4,200 compared with the west side
  • The longer line will cause electricity worth about $300 million to be lost in transit, the equivalent of all wind energy generated annually in Manitoba, and equivalent to the annual energy consumption of 40,000 cars.
  • The two routes traverse the same length of boreal forest (about 400 kilometres). In addition, however, the western route also traverses several hundred kilometres of the best agricultural soils in the most favourable agro-climatic zone in the province
  • There are 16 First Nations communities that would be affected by the eastern route and 15 by the western route, essentially the same number (neither route will traverse any aboriginal reserve land)
  • There are technical issues that show a route on the east side of the province provides much higher reliability and protection against risk from wind and ice storms
  • If Bipoles I and II are damaged, the eastern route for Bipole III is twice as effective as the western route for supplying southern Manitoba and the contracted power to the United States
The engineers go on to say that the current NDP government decided Bipole III must run west of the Manitoba lakes and directed the technical staff of Manitoba Hydro to make it happen.  One wonders if the provincial NDP government thinks money grows on trees.


  1. I have big plans for the east side of Lake Winnipeg once I run the bipole. Phase 2 consists of removing all the trees and then trucking in sand. Phase 3 will be bringing in camels and palm trees and call myself Sheik Hughie.

  2. It's funny - the NDP has no way to factually attack the facts, so they resort to personal attacks. The sign of a desperate, tired party.

  3. "much respected" .... gosh, I don't know what to say!

    Good summary of the issue, Purple.

  4. Cherenkov: No problem. I enjoy reading your blog.

    Blue Rod: I would have to agree. I have heard a much more convincing argument to build the line on the East side of Lake Winnipeg. So far, the NDP is the only group (political or non-political) who seem to think building it on the West side is the way to go.

  5. I must have missed it, what type of settlement did Hughie come to with all the Native bands on the east side? I assume all of Hughie public consultations meetings went smoothly because I never heard any negative feedback. Hughie's tender process for the job must of went smooth also, never heard anything bad either.

  6. Fake Blue: Did you bother to read the blog? I'll help you out:

    " There are 16 First Nations communities that would be affected by the eastern route and 15 by the western route, essentially the same number (neither route will traverse any aboriginal reserve land)"

    No matter which side they build Bipole 3 on, it will pretty much affect the exact same number of Aboriginal communities.

  7. Yes I read the blog. Hughie says he is going down the east side. He must have already have agreements with the bands on the east side because he states it's the best route otherwise he's only blowing hot air.
    The only other explanation is that it's such a good secret even Hughie doesn't even know.

  8. You still have not given a valid argument to counter the argument of many in the province that state that running Bipole 3 should be built on the east side of Lake Winnipeg.

    Additionally, what is with your blog? I don't care for McFayden too much as leader of the opposition, but your blog makes it look like you have some kind of unhealthy obsession with the PC Manitoba leader.

    Do you not realize that most Manitobans will be disgusted with a website that does nothing but attack another person? In fact, there are people on the internet that think you are a secret Conservative, trying to make the NDP members look mentally unstable.

  9. I looked at www.bipole.ca, does anybody know where the $11,748 figure comes from? I can't make it add up.

  10. Derek,

    I assume they are referring to a 4 person household.

  11. There were ~1.25 million people in MB at the beginning of 2011. Subtract ~50K non-tax-paying First Nations people living on reserves and you get 300K families of four (the anti-west side petition linked to from the Tories' campaign site says the figure is based on a family of 4). Multiple that by $11,748 and you get $3.5 billion. MB Hydro's latest estimate for the total cost of Bipole III (west side) is $3.28 billion. So the Tories appear to be claiming that the cost difference between the east and west side is hundreds of millions of dollars more than the cost of the entire west side line. That looks like voodoo mathematics. A couple days ago, I emailed the party and my PC candidate for the source of their estimate. Party is silent, but candidate says he'll call me next week.

  12. My mistake. It's Hydro ratepayers - about 500,000 of us (http://www.energymanitoba.org/mb-hydro.htm) - who will foot the bill, i.e., all "on-grid" Manitobans, including First Nations, and presumably including about half as many ratepayer-equivalents out-of-province, given that even without the extra power Bipole III will add to MB Hydro's output, it already exports about a third of it. The estimates of the extra cost of the west side route that I've seen put it at $640 million to $1 billion. These don't attempt to take into account differences in externalized, or indirect, costs, which are expected to be much greater for the east side (e.g. possibly much greater litigation costs and opportunity costs due to delaying the development, loss of revenue if east side route power is boycotted by any bulk importers, cost of not getting UNESCO designation...). Conservatively, if you add $1 billion to the tab of 500K MB ratepayers, that's $2000 more each, not "$11,748."

  13. Did you know Banff and Jasper National Parks are UNESCO designated areas, yet have a number of roads, hydro, rail, and oil lines running through the area. Additionally, a paved road is going to be built through the East side of Lake Winnipeg.

    As for how much the line will cost, nobody knows (or is saying) for sure. It could be anywhere from $3.2-4.1 billion, as reported in various news sources. There seems to be a pattern with low-balling costs on major government projects as of late. The CMHR and the new Stadium are prime examples of this.

    And finally how do we know if there will be added litigation if the line is constructed on the east side? Just as many, if not more Manitobans will be affected by the West side route.

  14. I don't see why any gov't or political party - left or right - would want to spend (or make a crown corporation spend) significantly more on a major project unless it made a judgment call that the extra up-front cost would probably be exceeded by the long-term costs of taking the initially cheaper "route" (quite literally in this case) - unless the different parties have very disparate valuations of the social, environmental and political costs. Okay - clearly they do ;-)

    Hydro did release its official cost update on April 1 - at $3.28B, it's way higher than the original estimate but quite a bit lower than the leaked draft estimate (apparently) of $4.1B. Sure, the price tag could rise again by the time it's done, but so would an east side route. It's the difference that counts and whether it's a waste of money or a prudent investment, an ounce of prevention - call it what you will. Just in case you haven't read the pro-West side argument, here's a summary: http://www.heartoftheboreal.ca/about-the-east-side/bipole-3-decision

  15. So Syd,

    Are you going to at least try to refute the arguments of the 19 retired engineers that have stated the East Side is the way to go. Or are you just going to throw a red herring into the mix?

  16. I'm not informed enough to try and refute their arguments, but what you call a red herring, I call - barring information to the contrary (I've asked the PC party, and 3 days later have yet to receive any; my local PC candidate has offered to call me next week) - very shabby extreme public disinformation by the loudest critics of the west side route.

  17. I hope the PC candidate gets back to you. Feel free to post when and if you get a response.

  18. P.S. Although I said this before, I should add that any estimate of the excess upfront cost of West vs East isn't complete until we know if other costs and consequences will reduce that cost or increase it. Proponents of the Western route say there likely would be reductions; proponents of the Eastern route say these extra costs could well be greater for the Western route. It's worth noting that an assessment of these potential costs done for Hydro in 2007 ("the Farlinger Report") which my PC candidate praised and urged me to look up tends more often than not to err on the side of the concerns which prompted the NDP to choose the Western route (I say "err on the side of" because it's just very hard to know with certainty what will or will not happen). At least that was my impression as I read through much of it this afternoon (see http://www.google.ca/url?sa=t&source=web&cd=1&ved=0CBUQFjAA&url=http%3A%2F%2Fmanitobawildlands.org%2Fpdfs%2FBipoleIIITrRoutStudy_2007.pdf&rct=j&q=farlinger%20report&ei=S5-kTfyoB6OD0QGG-PjkCA&usg=AFQjCNGMXmp7QYpT1IT4Uh1Fx-Qc_CjRVQ&sig2=PAroKLtgIs6_VUPXxmbPKg&cad=rja).

    Given the uncertainty about these other costs, for the PC party to sweep that aside and give an almost comically precise figure of $11,748 compounds the inappropriateness of their claim.

  19. I don't know what's gong on here, but I will try one more time to post the substantive update - based on my conversation with my POC candidate - about the PC party's claim to which my previous post is a "P.S." So far, it's disappeared twice since I posted and reposted it last night. In case length is an issue, I'll post it in three parts, below.

  20. Here's my disappearing post from last night:

    I spoke to my PC candidate today. There is no formula available for public consumption, but he gave me the assumptions upon which the estimate of $11,748 is based:
    1.) The western route will cost $4.1 billion. He says his party continues to distrust the new official MB Hydro estimate of $3.28B, so it's sticking with the earlier leaked, unofficial Hydro estimate.
    2.) The east side route will cost $788 million. He doesn't know the source of that estimate but says he'll get back to me when/if he gets that info.
    With those figures, the PC campaign claim that the Western corridor will cost nearly $12K more per family (of four - although they don't quantify this in most of the material I've seen) jibes closely with my own "reverse engineering," based on MB's pop. of ~1.25 million.

    But is this a case of "garbage in, garbage out"? I believe it is.

  21. cont'd:

    For one thing, the pro-East side coalition (the engineers etc.) appears to consistently peg the difference at about $1 billion, compared to the PC's politicized difference of ~$3.3 billion. Most of the difference appears to be accounted for by the PC party's decision not to include the cost of the new converters in their east side estimate. My candidate said the reason for this is that Hydro's Brennan, when questioned by McFayden in the Legislature (a committee hearing, I assume), evidently qualified his claim that new converters will be needed whichever route is taken in a way that indicates they won't necessarilly be needed right away for an east side Bipole. Perhaps, if it can be shown that money will be saved by a long delay, a reduced converter cost could be added to the east side estimate. But to leave this very considerable cost out entirely - I believe $1.75 billion is the latest figure - is, in my view, "garbage in." The engineers appear to feel the same way.

    Speaking of the engineers and the related coalition, if one uses their figure of $1B for the extra cost and divides it into hypothetical families of four, the extra cost per family is ~$3300. That would make the PC's very loud and aggressive campaign to tell Manitobans the figure is close to $12,000 monumentally misleading.

  22. cont'd (last part):

    The decision to divvy the cost up by families of 4 is itself, arguably, designed to exaggerate the impact on Hydro ratepayers who are the Manitobans who will feel the financial impact. I have one source (http://www.energymanitoba.org/mb-hydro.htm) which says there are 510,000 electricity ratepayers in MB. I assume this includes everyone from single-person households thru families of 20 and businesses large and small. Divide that $1B by 510K, and you get ~$2000 extra per ratepayer for the West side Bipole corridor. An even bigger whopper of a difference.

    I think the arguments for and against the disputed Bipole routes are based mostly on judgement calls driven by differing social values in the face of very considerable unknowns (will building on the east side kill the UNESCO bid?, etc.). This is fair and legitimate. But muddying the waters with grossly exaggerated facts and figures, whether it's an outdatedly low estimate for the total cost (the persistence of the $2.2B estimate until very recently) or what I believe to be a grossly exaggerated, politicized "garbage in, garbage out" claim about the extra cost to Manitoba families isn't fair or legitimate. I'm ready to "stand corrected" in the face of new data.

  23. Looks like time has vindicated me...

  24. As of the fall of 2014, the West Bipole III line will cost an estimated $4.6 Billion, about $500,000,000 more than the highest amount predicted in 2011. When all is said and done, it could conceivably reach $6.0 Billion dollars. This is the worst project in Manitoba history.