Accusations that NB Power grossly overcharged itself on the Point Lepreau nuclear refurbishment and padded its deferral account by as much as $100 million were baseless, the New Brunswick Energy and Utilities Board (EUB) has ruled.
"The Board accepts the current estimated balance in the deferral account of $1.036 billion," the board said in a decision delivered late Wednesday, wrapping up a year-long review of Lepreau's finances.
The finding was a rebuke to Public Intervener René Basque, who had asked that NB Power be made to recalculate Lepreau's costs from scratch due to significant errors.
Basque made the request based on claims by an expert witness he had hired, who said the utility had been miscalculating replacement power costs for the refurbishment by an enormous margin.
'The Board finds that Mr. Strunk made significant errors and that his estimate is not supported by the evidence.' —Energy and Utilities Board decision
U.S. energy expert Kurt Strunk made headlines in January, claiming NB Power had been generating extra power to make up for the absence of Lepreau and systematically overcharging the refurbishment's deferral account.
"I estimate that the order of magnitude reduction to the deferral account may be in excess of $100 million if changes are made so that the deferral balances are calculated in accordance with the regulations," Strunk stated in written evidence filed in the matter.
But the EUB offered a withering assessment of Strunk's analysis before rejecting it completely.
"The Board finds that Mr. Strunk made significant errors and that his estimate is not supported by the evidence," the decision states.
NB Power released a statement noting the EUB had sided with it, making special mention of Strunk's discredited accusation.
"Significantly, in ruling that NB Power correctly accounted for the deferred costs, the EUB dismissed claims that the account was overstated by $100 million," said the utility.
Performance to be monitored
The EUB also gave a lukewarm endorsement of NB Power's claim the refurbished reactor is likely to last for 210,000 full power hours over 27 years and should be financed on that basis, ordering the utility to update the reactor's performance annually.
"The Board is well aware that this is only a forecast and there is no certainty the refurbished PLGS (Point Lepreau Generating Station) will operate as forecast, nor is there any performance guarantee from AECL," the decision states.
"It is therefore important that a process be established to enable the Board to monitor the operation of the refurbished PLGS and to modify the recovery period if necessary."
Replacement power was needed to fill the gap of what Point Lepreau would normally produce during the 56-month refurbishment project and as a result it was given unique accounting treatment.
Costs for replacement power were charged directly to the Point Lepreau project and became part of its $2.4-billion price tag in a so-called "deferral account," bypassing NB Power's normal profit and loss statements
That allowed NB Power to claim $326 million in profits during the four-and-a-half year refurbishment, even though the deferral account was forcing the utility deeply into debt the entire time.