Construction of the most expensive public-infrastructure project in British Columbia's history, the Site C dam, will continue, dashing the hopes of environmentalists and some Indigenous communities that the new minority NDP government would stop construction.

"This is not a project we would have started," Premier John Horgan told reporters on Monday, ending months of speculation and review by announcing his intent to finish the partly built project. "We do it with a heavy heart."

Opinion: With Site C approval, BC NDP flows toward political pragmatism

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Despite the government's intent, the project still faces legal hurdles, with two First Nations announcing plans to proceed with court action.

Before the provincial election last May, the governing Liberals pushed to get construction, in their words, "past the point of no return," but in their impatience to get shovels in the ground, they exempted the project from an independent regulatory review.

It was only after the New Democrats gained power in July that the B.C. Utilities Commission (BCUC) was allowed to review the project, but its findings were inconclusive. With the cabinet and caucus deeply divided, it came down to a financial argument: With $2-billion worth of work already completed, the dam was too far along to stop.

Mr. Horgan acknowledged his party, caucus and cabinet are torn apart over the project because of its negative impact on the environment, on agricultural land and on First Nations. His friends and his family are among those British Columbians who are "very, very disappointed," he added.

But he said to cancel the project would have made it difficult to finance new capital expenditures for needed services including schools, roads and hospitals. The government also concluded that hydro rates would have climbed faster if the project was written off.

At a background briefing earlier in the day, government officials said that the project's budget has increased again, to $10.7-billion, but the project will be subject to additional oversight to try to ensure there will be no further delays or cost overruns.

However, already two First Nations have served notice that they are heading to court over the project, saying it infringes on their treaty rights. If successful, those lawsuits could drive the costs even higher.

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Mr. Horgan, who had been pressured by the NDP's trade union allies to continue the project, said the rest of it will be built with new hiring requirements designed to increase the number of apprentices and First Nations workers. And, in response to the loss of agricultural land, he pledged that some of the revenues generated by the dam, once it is in service, will be used to support farming.

With 1,100 megawatts of capacity, the Site C dam will provide enough energy to power the equivalent of about 450,000 homes a year. But it will flood 55 square kilometres of river valley and an environmental review concluded it will have negative effects on wildlife, agricultural land and First Nations' communities.

Ken Boon, a landowner whose family homestead, now expropriated, is to be flooded by the project, said Mr. Horgan's announcement was "quite shocking." Mr. Boon said he still holds out hope that a First Nations legal challenge can block the completion.

"I don't think the fight against Site C is over," he said. "I am sure the Liberal Party must be giddy with the fact that John Horgan is going to bring the project past the point of no return and complete it for them. Who would have thought that?"

Site C will be the third dam on the Peace River and has been on the drawing board for 40 years. Three years ago this month, then-premier Christy Clark stood in the B.C. Legislature's grand library rotunda to announce her government had approved the construction of the Site C dam.

The BCUC review, delivered in November, offered no easy out for Mr. Horgan's government. The commission estimated that the dam was over budget and that BC Hydro had overestimated the need for new energy but, in balance, the alternatives did not come out clearly ahead.

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With the decision to proceed, Mr. Horgan said he remains committed to reconciliation with First Nations, though he will find that effort much more difficult now.

National Chief Perry Bellegarde of the Assembly of First Nations said the decision to continue with the dam is "completely contrary" to reconciliation.

Within hours of the announcement, the West Moberly and Prophet River First Nations announced they are heading to court to argue the project infringes on their members' rights to hunt, trap and fish, and that the flooding of the valley will swallow ancestral graves.

Mr. Horgan however said B.C. will use the power generated by Site C to help the province – and the rest of the country – move away from fossil fuels by increasing reliance on clean electricity.

The BC Green Party, which is holding up the minority government in the Legislature, condemned the decision.

"We don't accept, and find troublesome, the justification that has been made for Site C," party Leader Andrew Weaver said. However, his party promised not to walk away from its agreement to prop up the NDP over this project.

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BC Hydro's president and COO Chris O'Riley would not return calls but issued a statement applauding the government's decision.