Canadian Manufacturing

AECL cost overruns for nuclear plant repairs not unusual, says New Brunswick minister

Craig Leonard said he would expect federal Crown corporation to be on hook for excessive costs



FREDERICTON—New Brunswick’s energy minister says it comes as no surprise to hear that Atomic Energy of Canada Ltd. incurred a $638-million cost overrun during its refurbishment of the Point Lepreau nuclear power plant, but that won’t stop the province’s efforts to seek compensation from Ottawa for its own financial losses.

Craig Leonard said he would expect the federal Crown corporation, which carried out the repair work, to be on the hook for the excessive costs since NB Power saw its own costs rise above its original budget of $1.4-billion.

“Certainly AECL would be in the same boat of taking on additional expenditures,” Leonard said in an interview.

“I don’t think it’s any reason for them to simply say they don’t have any further role in this project. We are going to continue to pursue our opportunities to get the compensation that is due to New Brunswick.”

Leonard said he still believes the refurbishment is a good deal because it has extended the life of the nuclear facility, which serves about one third of the province’s energy needs.

“If you look at the market today and try to obtain 700 megawatts baseload of emission-free power for $2.4-billion, you’re probably going to be searching for quite a while,” he said. “So we know it’s a good deal for New Brunswick.”

A memo prepared for the Prime Minister’s Office in December 2012 says AECL’s total costs were $1.17-billion, more than double the $540-million it initially budgeted for the refurbishment when it won the bid in 2005 to do the work.

It says most of that was driven by labour costs.

The document, obtained by The Canadian Press through an access-to-information request, also says NB Power has suggested that its cost overruns could amount to more than $1.3-billion.

But the provincial Crown utility company and Leonard dispute that, saying that figure is $1-billion.

The provincial government’s request for $1-billion in compensation from Ottawa has so far fallen on deaf ears, with the federal government saying only it will abide by the terms of the contract to refurbish the plant.

Norm Rubin of Energy Probe, a Toronto-based energy watchdog group, said nuclear power is a huge financial risk and cost overruns and delays are par for the course.

“It’s an industry that only a government can love, and it’s an industry that will break your heart over and over again if you care about the lost money,” he said.

In 2002, New Brunswick’s Public Utilities Board recommended against going ahead with the refurbishment, saying there was “no significant economic advantage” to the project.

But the government at the time decided three years later to proceed, saying the project was viable because it met environmental goals, maintained jobs and ensured power supply.

Rubin said the federal government shouldn’t compensate NB Power for its cost overruns, given the province’s refusal to accept the board’s advice.

“Why should the rest of us bail you out for deciding to bet on a loser?” he said in an interview from his Toronto office.

David Coon, leader of the New Brunswick Green party, has said he doubts Ottawa will be willing to compensate the province when AECL has already absorbed its own “massive” cost overruns.

Point Lepreau, Atlantic Canada’s only nuclear power plant, was commissioned in 1983 and was the world’s first Candu-6 reactor to begin commercial production of electricity.

The refurbishment was supposed to cost $1.4-billion and take 18 months, but it ran three years behind schedule because of technical problems including scratches that forced the replacement of all 380 calandria tubes that house fuel channels and uranium fuel bundles that power the reactor.

NB Power estimates the refurbishment will extend the life of the reactor by 27 years, but Rubin said he doubts that will be the case.

“We have too many examples of promise them everything and give them a dud, and it happens in the initial construction of nuclear generating stations and it happens again when they need major capital upgrades,” Rubin said.

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