New Brunswick

Graham pressures Harper for Point Lepreau deadline

New Brunswick Premier Shawn Graham is ratcheting up the pressure on the federal government to get a firm completion date for the Point Lepreau refurbishment project.

Premier Shawn Graham has sent Prime Minister Stephen Harper a second letter asking for a firm completion date for the $1.4-billion refurbishment of the Point Lepreau nuclear reactor. ((CBC))
New Brunswick Premier Shawn Graham is ratcheting up the pressure on the federal government to get a firm completion date for the Point Lepreau refurbishment project.

Graham announced Thursday that he has sent a second letter to Prime Minister Stephen Harper asking that the federal Department of Natural Resources, which is responsible for Atomic Energy of Canada Ltd., provide an update on the nuclear reactor refurbishment project — which is months behind schedule.

"The successful refurbishment of Point Lepreau is of significant importance to New Brunswickers, and I am very concerned with the impact that these delays will have on our province," Graham said in a statement.

Graham said Wednesday that NB Power completed its portion of the massive construction project on time, and that the delays only started accruing when Atomic Energy of Canada Ltd. became involved.

The premier also accused AECL of showing a "lack of focus" on the refurbishment project.

In Graham's letter Tuesday to Harper, the premier warned the prime minister about the financial implications about any significant delays at the nuclear plant.

"The losses occasioned by these delays are extremely costly for both AECL and NB Power. AECL and NB Power have a fixed-price contract with various damage formulas," Graham's letter said.

"No doubt our respective counsel could advise on the implications for each of the parties. I am writing in the same vein as my January, to request that the federal government keep NB Power whole for these losses. We did not contract for failure and damage claims. We contracted for success."

The reactor was originally intended to begin generating electricity again on Oct. 1.

9 months behind schedule

New Brunswick Energy Minister Jack Keir says the ongoing issues at AECL, including the delay of the Point Lepreau refurbishment project, "causes everybody to pause and ponder." ((CBC))
NB Power has not released an up-to-date estimate of the project's delay. However, CBC News reported earlier in September that the refurbishment is at least nine months behind schedule.

For every day that Point Lepreau remains offline, it costs the New Brunswick government roughly $1 million upfront, though that should eventually be mitigated somewhat. Before the refurbishment project started, NB Power bought insurance just in case the reactor fell behind schedule. Additionally, NB Power renegotiated a series of contracts in 2005 to include stiffer penalties on AECL if the project was not completed on time.

If the penalties and insurance funds are fully recouped, the monthly cost to NB Power would be about $20 million.

NB Power would still be on the hook for the entire cost of the delays in the month of October, which isn't covered by the insurance or penalties.

Graham said in a Jan. 21 letter to Harper that even with insurance and contractual damage provisions, the delays estimated at that point "leave NB Power significantly over budget."

The premier also asked that Harper shelve plans to reorganize or sell of parts of AECL until after the refurbishment project was completed.

"I would ask that the federal government defer any plans that you may be considering to divest or privatize AECL until this very important project is completed," the letter stated.

Refurbishment still the right decision

Graham told reporters on Thursday that the decision to move forward with the refurbishment is still a good deal.

When the former Progressive Conservative government approved the $1.4-billion project, the only other option was to enter into a deal with Ontario's Bruce Power.

That option would have cost $450 million more as Bruce Power would have paid for the entire refurbishment and any related delays, but then would have sold the nuclear power back to the province. The $450 million was described at the time of the decision as a risk premium.

Graham pointed out that the previous government signed the refurbishment contract with AECL, but he agrees it was the province's best option.

 "I wasn't at the decision-making table when the decision was made. But we did stand up and support the government of the day when the decision was made. And we stand by that today," he said.

AECL's completion date would have to extend into late 2010 before the extra costs would exceed the Bruce Power price. 

In speaking with reporters, Energy Minister Jack Keir refused to say he still has faith in the federal agency.

 "With all the noise around AECL, whether it's with respect to this refurbishment, or whether it's isotopes or some other issue, any noise created like that obviously causes everybody to pause and ponder," he said.

Point Lepreau is Atlantic Canada's only nuclear reactor and generates 635 megawatts of electricity, representing about 30 per cent of the province's energy needs. The refurbishment will add 25 years to the Candu-6 reactor's working life.

This is the first refurbishment of a Candu-6 ever attempted by AECL and was intended to be used as a model for the federal Crown corporation to show off to other countries that own similar reactor models.