Issues with BC Hydro and land access have resulted in some cost overruns for Cumberland’s new water treatment plant.
Manager of operations Rob Crisfield updated members of council at the May 25 board meeting, telling them the project will cost almost $200,000 more than expected.
“It’s basically related to the delay of the project,” he said.
The delay has also been due in part to negotiations with an owner of property needed for a right of way for the infrastructure project. Much of the work on the plant and the reservoir is now complete, with BC Hydro completing a three-phase electrical service connection, which required the property right of way.
“The good news is we have power to the water treatment plant,” he said. “The bad news is we’ve incurred some extra costs that we didn’t really foresee when we started this project two or three years ago.”
With the project delays, negotiations for the right of way and additional requirements from BC Hydro, such as access improvements, hiring an engineer and overhead line company to assess existing three-power supply and minor improvements to the existing electrical supply line, along with project scope changes, there have been more costs than in the original budget, even with contingency funds set aside.
To pay for this, Crisfield said the Village will need to find a source, likely from borrowing or using reserves.
Coun. Vickey Brown asked whether there was any kind of mechanism with BC Hydro, not so much to try to recoup costs but to provide feedback to the utility about the process.
Crisfield said he had attended annual stakeholder meetings with BC Hydro and also been in touch with the utility’s public relations staff but added there does not appear to be a formal channel.
“Hydro’s been very challenging,” he said. “They know we’re frustrated…. I’ve never been through a process like this before.”
C0un. Jesse Ketler asked what impact the cost overruns might have on another large infrastructure project, the sewage lagoon upgrade.
Michelle Mason, chief financial officer for the Village, responded that staff transfer funds in anticipation, but they should take into account transfer funds in the future to the reserve to cover future overrun costs.
“This is what the reserve’s for,” she said, adding the Village does have room for extra borrowing on the project because of some grant funding that came through, which offset what was needed from borrowing. “We do have a bit of cushion for that type of funding.”
Coun. Sean Sullivan made a motion, in line with the staff recommendation, to fund the cost overruns from interest earnings, the remaining balance of long-term debt and funds from sewer and water infrastructure asset replacement reserve for a total of $197,000. As well, this requires an amendment to the 2020-2024 financial plan for the Village. Council passed the motion unanimously.
Work to break ground on the project began almost two years ago. The facility will include ultraviolet disinfection as well as on-site chlorine generation. Initially, it was hoped the new plant would be operational by spring 2019.