The much-publicized SaskPower carbon capture project at Boundary Dam is facing significant delays that are costing the crown corporation millions of dollars.

The facility, which captures carbon dioxide (CO2) from the coal-fired plant near Estevan, Sask., opened last fall to much fanfare.

Over the past year, it was planning to sell 800,000 tonnes of captured CO2 to private company Cenovus Energy at a cost of $25 per tonne.

But it has only supplied half that amount.

"Every plant has first year operating issues," said Mike Marsh, president and CEO of SaskPower. "As the problems are discovered we're correcting them. Our engineers have been working on this. Our contractors and consultants have been working on this and this is typical for a large plant."

The carbon capture facility has only been operating at 40 per cent of its capacity, but SaskPower was planning to have it running at 80 per cent.

The delay has already forced the power company to pay Cenovus $12 million in penalties.

 Mike Marsh, CEO SaskPower

Mike Marsh, SaskPower's president and CEO, admitted the delays are continuing and could cost millions more in penalties by the end of the year. (CBC)

Marsh admitted the delays are continuing and that could mean another $5 million to $6 million more in penalties by the end of the year.

More losses anticipated

SaskPower was also planning for $20 million in revenue from the carbon capture project this year, but instead will make just half that.

Marsh admitted the costs may not end there.

"There could be additional engineering expense. There could be additional contractor expense if something has to be replaced. We don't know what that looks like yet," Marsh told a media scrum at the legislature.

The NDP raised the issue in question period after receiving leaked internal SaskPower briefing notes.

Those documents also indicate that SaskPower is blaming some of the delay on companies involved in building the project.

Marsh confirmed that the crown corporation will be pursuing legal action against some of them.  

"There's a number of technical issues that have arisen and we've worked through them and we'll continue to work through them but I can't get into any details because this matter is in the system right now and we will be resolving that with the contractors in the courts," said Marsh.

He did not provide the names of the companies or any details about the legal action.

Marsh hopes the plant will be running at full capacity by 2016.