NB Power might need to be more aggressive in paying off deferred costs from the refurbishment of its Point Lepreau Nuclear Generating Station, the New Brunswick Energy and Utilities Board heard Monday.
The hearings, which began just as the trouble-plagued Lepreau reactor shut down for the third time since restarting last year, is considering how NB Power should pay for just over $1 billion in regular costs the utility deferred during its refurbishment from March 2008 to November 2012.
The utility wants to pay the amount, much like a home mortgage, in equal monthly instalments over 27 years. But EUB lawyer Ellen Desmond questioned whether that puts too much faith in the plant's prospects for trouble-free operation.
"Isn't it fair to say that as we move out into the future, we have less certainty around the life of the plant in terms of how long the asset will actually continue to operate?" asked Desmond to a panel of NB Power executives.
But NB Power says it is equally likely Lepreau could perform better than expected over time and paying its costs gradually prevents current customers from paying too much for something that will also benefit future customers.
"I agree there would be some uncertainty, but it could be both favourable or unfavourable," said Jonathan Dobson, NB Power's director of enterprise risk and treasury management in advocating for lower monthly payments on Lepreau..
"It provides for stability and predictability, and is a fair approach to allocate it among customers over the life of the plant."
Most of the deferred expense comes from the utility's need to replace power while Lepreau, which is its largest source of generation, was offline during a 54-month long reconstruction. The utility relied more heavily on its other generators during that time and imported power from neighbouring utilities to make up the difference.
NB Power told the EUB hearing in Fredericton that it would like to repay the deferred costs over more than 300 equal monthly payments of $5.6 million. In the first year that lowers the principal owed on the deferral account by $1.6 million a month, or about $20-million in the first year. Desmond asked if more aggressive payments on the principal in early years wouldn't guard against the reactor not performing as well as expected, which it hasn't so far.
"If the Board was concerned about the outstanding liability, and the event that perhaps Point Lepreau was to stop working earlier than expected, would you agree that … reduces that risk?" asked Desmond.
Dobson agreed, but suggested that concern is unwarranted and could force the utility to raise rates for current customers unnecessarily.
Desmond asked how the reactor was currently performing.
"Actually, currently the Lepreau is out for a station outage," replied NB Power vice president Darren Murphy.
On Friday, crews powered Lepreau down to deal with the latest in a series of problems to plague the reactor since restarting last November. One of four steam lines that turn the station's giant turbine malfunctioned last spring and is being repaired over the next two weeks. The plant suffered other slowdowns, including when the chemistry of the water in the plant's boilers was found to be too corrosive shortly after restart and later when plugs in the end of the reactor's new fuel channels became stuck and couldn't be removed to allow for refuelling.
Those and some other minor issues severely cut Lepreau's production during its first 11 months, but NB Power has publicly vowed following the latest fix that the plant will operate at 100 per cent capacity through the winter until a planned shutdown next spring.