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New Brunswick Approves $1.4-Billion Overhaul of Point Lepreau Nuclear Plant

Posted on: Friday, 29 July 2005, 18:00 CDT

FREDERICTON (CP) - New Brunswick will go ahead with a $1.4-billion overhaul of the aging Point Lepreau nuclear plant, but Premier Bernard Lord issued an ominous warning Friday, saying the project is a riskier proposition than the province would have liked.

Lord confirmed that Atomic Energy of Canada Ltd., hired as the general contractor, will be paid a fixed price and could face substantial penalties if the federal Crown corporation fails to meet the September 2009 deadline.

The 22-year-old Candu reactor was supposed to be shut down in 2008, but the premier said the costs associated with closing the plant - about $500 million - and building new coal-fired plants to meet the province's energy needs just didn't make financial sense.

"This is the lowest-price option of all the options on the table," Lord told a news conference.

However, the premier said the refurbishment deal presents a substantial risk for New Brunswick because the province is financing the entire project.

"We acknowledge that New Brunswick is taking on more risk than we had originally intended. I think it's important for everyone to realize that."

The premier then lashed out at the federal government for refusing to shoulder some of the risk by contributing funding or borrowing money on behalf of the province.

"Two weeks ago, we were very disappointed by the decision of the federal government to say no to New Brunswick," he said. "I'm also surprised they would support the nuclear industry in foreign countries, such as China, but not support the industry here at home."

This will mark the first time that a Candu-6 reactor will be given a full refurbishing, which has prompted some critics to warn that the final price tag could be much higher than expected.

Tom Adams, executive director of the Toronto-based watchdog group Energy Probe, said AECL's guarantees could end up costing taxpayers across Canada.

"AECL has offered what appears to be fairly rich protection for New Brunswick in terms of cost and delays," Adams said in an interview.

"Those guarantees may prove to be extremely expensive for federal taxpayers."

Adams noted that the refurbishment of the Pickering nuclear station near Toronto took far longer than expected, and the construction of two small reactors at a laboratory in Chalk River, Ont., is now over budget and almost five years behind schedule.

"I would put the chances of Lepreau being finished on schedule at little to none."

Lord's Conservative government rejected a bid by Bruce Power that would have seen the Ontario company assuming a large financial risk by taking control of the plant and selling electricity back to the province's electric utility, N.B. Power.

But N.B. Power's president, David Hay, said the Bruce deal would have cost the province an additional $450 million.

"It is our belief that this option (with AECL) represents the best balance of risk and cost for the ratepayers of New Brunswick," he said.

Hay stressed that any increase in power rates over the next few years will not be linked to the Lepreau project.

Ray Frenette, chairman of AECL, said the Crown corporation hopes to reduce the financial risks by ensuring the project is completed on time.

"We know that reactor from A to Z," Frenette said in an interview from his Toronto office. "We have over the last two or three years completed projects on time and under budget in China . . . projects worth about $4 billion."

The refurbishment is expected to extend Lepreau's life by another 20 to 25 years.

As well, keeping the plant will enable Lord to deliver on his pledge to have one-third of province's energy coming from nuclear power, one-third from renewable energy and one third from other sources.

The plant near Saint John, N.B., employs 700 people, and provides 30 per cent of the province's energy requirements.

It is the only nuclear power plant in Atlantic Canada.

Construction of Lepreau began in May 1975 and was completed in late 1981. The plant generated its first power in 1982 and began commercial operation in February 1983.

Built with the help of AECL, it was the first Candu-6 reactor to be licensed for operation.

In 2002, New Brunswick's Public Utilities Board scuttled NB Power's proposal to refurbish the plant by partnering with AECL.

At the time, the regulatory board said the project, then estimated to cost $845 million, was too risky.

That estimate was boosted to $1.4 billion in a report prepared for the province in 2004 by an international nuclear expert.

Earlier this year, Lord said the province could be forced to mothball Lepreau and build coal-fired generating plants if Ottawa failed to cover some of the costs.

But the federal government said it wouldn't contribute funds because such a grant would set an expensive precedent that would prompt other provinces to seek a similar deal.

At the time, Lord said the province had been misled and betrayed by Ottawa.

Meanwhile, the overhaul will mean a hefty bill for ratepayers in Prince Edward Island.

Since the P.E.I. power utility, Maritime Electric, receives up to 30 per cent of its electricity from Lepreau, the province will get a bill for about $70 million.

Still, the province's energy minister said he won't mind paying the bill.

"We get 30 megawatts of power . . . from Lepreau and if they were to decommission it, we'd have to find that power someplace else," said Jamie Ballem.u

Source: Canadian Press

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