Calling it a "difficult decision," the B.C. government has decided to go ahead with the controversial Site C hydroelectric dam, paving the way for work to restart.

"At the end of the day, we've come to a conclusion that, although Site C is not the project we would have favoured or would have started, it must be completed," said Premier John Horgan in announcing the decision.

"This is a very, very divisive issue, and will have profound impact … for a lot of British Columbians. We have not been taking this decision lightly."

The NDP government had been debating whether to continue the construction of the dam — which will displace farmers and submerge Indigenous lands as it floods 5,500 hectares of the Peace River valley — or cancel the work midway through the job.

Ultimately, the government concluded that cancelling the project near Fort St. John would result in a 12-per-cent increase in hydro rates in 2020. It also forecast overall rates would be nearly twice as high for 20 years beyond 2020 if it cancelled Site C — or would leave the government with significantly less money to spend on other infrastructure spending.

An estimated $2 billion has been spent so far on the dam, announced by the previous B.C. Liberal government in 2014.

The government now expects the dam, originally budgeted at $8.3 billion, will cost approximately $10 billion, with $700 million set aside in a reserve for overruns.

The B.C. Utilities Commission, the independent energy regulator, concluded in its assessment that the dam is over budget and behind its scheduled completion of 2024.

Premier John Horgan is giving the green light to continued construction on the controversial Site C dam project. (Chad Hipolito/Canadian Press)

Indigenous, Green opposition

Immediately after the decision was made, BC Hydro and the Independent Contractors and Businesses Association voiced their support for Horgan's choice.

But the dam has been marked by deeply divisive approaches to environmental, economic, technological and Indigenous concerns that have become the front lines of political battles in B.C. — and many groups representing those factions immediately let their displeasure over the the Site C decision be known.

"Today, Site C is no longer simply a B.C. Liberal boondoggle — it has now become the B.C. NDP's project. They are accountable to British Columbians for the impact this project will have on our future," said Green Party leader Andrew Weaver in a statement.

"We have seen what is happening to ratepayers in Newfoundland because of Muskrat Falls, a similar project, where rates are set to almost double. I am deeply concerned that similar impacts are now in store for B.C. ratepayers."

However, he has said his party, which holds the balance of power in B.C.'s legislature, would not attempt to force an election over the issue.

While BC Hydro has reached benefit-sharing agreements with many Indigenous groups, there are several ongoing legal challenges, and the West Moberly and Prophet First Nations have said they will seek a court injunction to halt construction and begin a civil action.

Premier John Horgan on decision to continue with <a href="https://twitter.com/hashtag/SiteC?src=hash&ref_src=twsrc%5Etfw">#SiteC</a>: "I am not the first person to stand before you and disappoint Indigenous people." <a href="https://t.co/Fm9Rk3Q6hu">https://t.co/Fm9Rk3Q6hu</a> <a href="https://twitter.com/hashtag/bcpoli?src=hash&ref_src=twsrc%5Etfw">#bcpoli</a> <a href="https://t.co/ywrn03Q3uF">pic.twitter.com/ywrn03Q3uF</a> —@cbcnewsbc

"Needless to say, we're deeply and bitterly disappointed. It's absolutely heartbreaking," said Grand Chief Stewart Phillip of the Union of B.C. Indian Chiefs.

Horgan acknowledged disappointment by many Indigenous people, but said his government is still committed to adopting the principles of the United Nations Declaration on the Rights of Indigenous Peoples.

"Look, there has been over 150 years of disappointment in B.C. I am not the first person to stand before you and disappoint Indigenous people," he said.

"But I think I am the first to [stand] before you and say I am going to do my level best to make amends for a whole host of issues and decisions that previous governments have made to put Indigenous people in an unwinnable situation."