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Skyrocketing cost of Trans Mountain places unacceptable burden on taxpayers, lawyers say

Friday, February 7, 2020

Estimated cost jumps from $7.4B to $12.6B, prompting calls for government to abandon the project

VANCOUVER, BC, Musqueam, Squamish & Tsleil-Waututh Territories - A $5.2 billion cost increase for the Trans Mountain pipeline and tankers project will saddle taxpayers with an unacceptable burden if the project moves ahead, say lawyers at West Coast Environmental Law. 

Trans Mountain announced today that the projected cost for construction has risen to $12.6 billion – a dramatic ~70% increase from recent estimates of $7.4 billion, and even greater from the initial estimate of $5.4 billion in Kinder Morgan’s original application. This cost is in addition to the $4.4 billion purchase price of the existing Trans Mountain pipeline, as well as a $600 million reserve recommended to cover potential contingencies, bringing the total cost to over $17 billion. 

“For months, Canadians have been left wondering about the costs creeping up for this risky, uneconomic project. These new estimates should be a wake-up call for the federal government that it’s time to walk away from Trans Mountain and focus on economic alternatives that actually make sense for taxpayers, communities and the environment,” said Eugene Kung, Staff Lawyer. 

In addition to the increased costs, Trans Mountain CEO Ian Anderson announced updated construction timelines, aiming to have the pipeline in service by the end of 2022 – one year later than previously announced. 

“Canada’s Parliamentary Budget Officer warned that a cost increase of just 10% would lower the project’s value by $453 million, and that a one-year delay would make the project uneconomical. What more will it take for the federal government to realize that this boondoggle of a project is simply not worth the risk?” Kung said. 

Trans Mountain says the increased costs reflect the impact of delays, enhanced environmental protections and “Indigenous inclusion,” and some suggest that Indigenous legal challenges and accommodation measures are to blame. But lawyers note that costs associated with Indigenous consultation and accommodation – which are required by the Constitution – should have been properly accounted for in Trans Mountain’s planning and projections. 

“Trans Mountain either failed to properly account for these costs, or deliberately hid them to mislead taxpayers,” said Kung. “The recent Federal Court of Appeal decision confirmed that neither the Canadian Energy Regulator nor Cabinet considered fresh economic information in their reconsideration of the project, despite repeated requests by First Nations to do so. And now Canadian taxpayers are on the hook for a lot more than they knew about. This is irresponsible fiscal policy by the federal government.”

The new estimate announced today is aligned with previous estimates by economist Robyn Allan, who estimated that a cost of $12 billion for the expansion would result in a further cost to Canadians of about $8 billion, because of how the pipeline’s tolls are structured. 

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For more information, please contact:

Eugene Kung, Staff Lawyer
604-601-2514, ekung@wcel.org