Canadian Manufacturing

Bungled Point Lepreau refurbishment costs could surpass $3B

When the refurbishment began in 2008, it was expected to cost $1.4 billion, but that ballooned as a result of technical problems and delays

FREDERICTON—The cost of refurbishing New Brunswick’s Point Lepreau nuclear power plant could be as high as $3.3 billion, a memo for the Prime Minister’s Office suggests.

The three-page memo says Atomic Energy of Canada Ltd. won the bid to carry out the work for about $540 million, but the total cost of the project for the federal Crown corporation reached $1.17 billion, resulting in a cost overrun of $638 million.

“While some of these costs resulted from having to construct a replacement tube set for the reactor, the majority of the cost overrun was labour costs,” says the Dec. 14, 2012, memo signed by Wayne Wouters, clerk of the Privy Council.

“For the duration of the refurbishment, there were hundreds of highly specialized and costly skilled employees on site required not only for engineering and the overhaul work, but to address the mounting problem-solving challenges AECL faced.”

The memo, obtained by The Canadian Press through an access-to-information request, also says NB Power has suggested its cost overruns could amount to more than $1.3 billion, about $300 million more than the provincial Crown utility company even acknowledges.

“Some of these costs were driven by the need to source alternative energy during the three-year delay,” it says. “However, most of the costs arose because of the need to maintain the full complement of its specialized employees on site during the refurbishment, and to ensure their continued training and certification.”

When the refurbishment began in 2008, it was expected to cost $1.4 billion. But that ballooned as a result of technical problems and delays that extended the project three years longer than scheduled.

NB Power has said the overall cost of refurbishing Point Lepreau was about $2.4 billion, but the figures contained in the memo suggest that could be as high as $3.3 billion when the cost overruns for NB Power and AECL as calculated by the Privy Council are taken into account.

David Coon, leader of the New Brunswick Green party, said he was stunned to hear of the “massive” cost overruns incurred by AECL, adding that it may explain why the federal government has refused to give in to the province’s claims for compensation.

The New Brunswick government has been pushing Ottawa for years to compensate it for the full share of its cost overruns, arguing that it should not be on the hook for AECL’s delays climbing the learning curve of fixing a Candu-6 reactor for the first time.

But Prime Minister Stephen Harper has not budged, saying only that his government will abide by the terms of the contract to refurbish the reactor.

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.

It was also supposed to be the first Candu-6 to complete a major refurbishment, but problems during the project repeatedly delayed completion.

One of the biggest challenges was replacement of the plant’s 380 calandria tubes, which house fuel channels and uranium fuel bundles that power the reactor.

The first effort by AECL to install the tubes failed when tiny scratches caused by wire brushes raised concerns that joints might not be reliable for 25 years. The tubes had to be removed and reinstalled.

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