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(Adds details on project, background)
VANCOUVER, Dec 16 (Reuters) - British Columbia will go ahead with building the Site C hydroelectric dam, Premier Christy Clark said on Tuesday, even as the controversial project's estimated cost rose to as much as C$8.78 billion ($7.55 billion).
The dam and hydroelectric generating station, which has been on the drawing board for more than 30 years, will provide the Western Canadian province with the "most affordable, reliable clean power for over 100 years", Clark said.
State-owned utility BC Hydro, which is developing the project, says the 1,100 megawatt dam would help meet a forecast 40 percent increase in British Columbia's electricity needs over the next 20 years as the economy, population and liquefied natural gas industries expand.
Critics say the dam, planned for the Peace River in northeastern British Columbia, will flood farmland and destroy wildlife habitat and heritage sites.
The capital cost of building the project has risen to C$8.3 billion. Including a project reserve of C$440 million for events outside of BC Hydro's control raises the total cost to C$8.78 billion - nearly C$900 million above the government's previous estimate of C$7.9 billion.
Construction of the project, which will provide enough electricity for about 450,000 homes a year, will start next summer and take about eight years, the government said. It is expected to create about 10,000 construction jobs.
Canadian and provincial regulators in October approved Site C, with conditions, saying it is in the public interest and its benefits outweigh potentially adverse impacts.
A May review panel report warned that the project could result in losses to wildlife, rare plants, fish and archaeological sites. It would also force First Nations aboriginal groups to alter their use of land and water in the region, the report said. (Reporting by Nicole Mordant in Vancouver; editing by Jeffrey Hodgson and Leslie Adler)