Crown corporation attributes the increased cost of construction to market pressures and changes.
Drilling boom that started in 2008 has boosted US natural gas production by 30%.
Ont. Chamber of Commerce says rising costs could force one in 20 companies out of business.
Will also build a solar farm on the site as part of its $1.1 billion plan to modernize its infrastructure.
Critics warn the Site-C hydroelectric dam would flood an 83-km stretch of the Peace River Valley.