New Brunswick

Top-secret Point Lepreau insurance settlement details leaking

What is supposed to be a top-secret settlement NB Power reached with insurers last year over problems encountered during the troubled Point Lepreau nuclear plant refurbishment appears to be worth just under $160 million, according to various financial details inadvertently released by the utility.

NB Power deal over nuclear plant refurbishment may be worth $159M, according to inadvertently released figures

NB Power refused to reveal how much money it got in a settlement with insurance companies last year over cost overruns at Point Lepreau. (Photo submitted)

What is supposed to be a top-secret settlement between NB Power and insurers over problems encountered during the troubled Point Lepreau nuclear plant refurbishment appears to be worth just under $160 million, according to various financial details inadvertently released by the utility.

NB Power is not confirming the amount, claiming it is still a company secret.

But there are signs the Lepreau settlement, reached last year, is worth slightly less than half the $320.1 million the utility said it was owed when it filed a lawsuit against insurers in 2012 for non-payment of its claim over damages and delays.

"We cannot provide a specific number," said Marc Belliveau, a spokesperson for NB Power, in an email to CBC News about the settlement amount.

"We continue to believe that keeping this information confidential is in the best interest of customers as we continue to work through the remaining litigation."

NB Power has been trying to keep details of the Lepreau insurance settlement under wraps as it pursues additional compensation from Atomic Energy of Canada Ltd. It was the main contractor during the refurbishment of the nuclear plant that ultimately ran three years behind schedule and went $1 billion over budget.

But Matthew Wegener, a professor of accounting at the University of New Brunswick's Saint John campus, says NB Power has not been as disciplined redacting information about the settlement from its budget documents this year as it was last year and doubts AECL will have a hard time piecing together precise settlement details if it chooses.

Wegener's own estimate from a review of public information is that the settlement is worth around $159 million, although he says that could be refined with deeper analysis of available information.

"It's not overly difficult, just time-consuming," said Wegener.

"It depends on how much certainty you want. Just to get that estimate, really it only took me a couple of hours."

UNBSJ accounting professor Matthew Wegener estimates the settlement is worth about $159 million. (CBC)

Last year, NB Power announced it had settled a claim with insurers for part of the refurbishment delays caused when workers used wire brushes that left scratches on critical components of the reactor that were supposed to be polished.

The scratches caused problems as the reactor was being reassembled and eventually took about a year to be resolved.

NB Power made a damage claim with insurers for $65.1 million over the scratches and a further $255 million claim for the delays caused by repairing them.

The redactions [this year] within their budgets are not really sufficient to be concealing anything.- Matthew Wegener, UNBSJ accounting professor

The legal fight dragged on for six years but last April the utility announced it had settled the claims. However, the utility would not say what it received, insisting the information was too sensitive to be released publicly.

"Immediate public disclosure of the terms of settlement would be directly and substantially detrimental to NB Power's opportunity to reach a favourable resolution of remaining claims between NB Power and AECL," NB Power lawyer John Furey told the EUB at a hearing hearing in Saint John.

Furey said if Atomic Energy of Canada Ltd. found out what NB Power won from insurers it could affect how much the utility can ultimately wring from the company — or worse — might encourage AECL to make a claim against NB Power for part of the insurance money for itself.

A sample of NB Power's redacted 2018/19 budgeted financial statements. (NB Power)

Settlement details were shared with EUB members, financial experts and the public intervener, but were otherwise sealed.

Several hearings dealing with the settlement were held behind closed doors, with those in attendance subject to confidentiality agreements. Transcripts of those hearings remain secret.

NB Power's income, balance sheet and cash flow statements were also rewritten to account for the financial impact of the settlement, but 30 of 66 financial entries were blacked out in the public version to prevent anyone from piecing amounts together.

However, this year many of those blacked out values have been disclosed in the utility's latest application for a rate increase and Wegener says it is much easier to track how settlement money hit NB Power's accounts.

"The original redactions were pretty effective," said Wegener

"The redactions [this year] within their budgets are not really sufficient to be concealing anything."

No lawsuits filed yet

Public intervener Heather Black has seen the settlement, but will not speak about it because of the non-disclosure agreement she signed last year. She also would not comment on whether NB Power has failed to protect the secrecy of settlement details in this year's budget submission.

"I am still bound by the confidentiality undertaking and can't give you any insight without potentially violating it," she said in an email to CBC News.

From publicly available accounts Wegener looked at, he says the information appears to show the insurance settlement involved a $48.5 million payment for direct damage to the plant caused by the scratches and a $102 million payment for startup delays caused by them.

In addition, he says based on those numbers there would have been another $9 million in settlement funds shared between legal fees and a payment to P.E.I.'s power company Maritime Electric, which owns just over four per cent of Lepreau's output and expenses.

Wegener says his $159 million estimate of the insurance settlement could be off slightly, but the fact it can be made at all shows how much information that was secret last year has leaked into public view this year.

Belliveau acknowledges some previously secret information about the settlement has become public in NB Power's financial reporting, but says that was inevitable and expected.

NB Power continues to "engage in negotiations" with AECL for compensation for cost overruns on the Lepreau refurbishment even though the job finished more than six years ago. The utility says it has not filed any lawsuits over the issue yet and any amount it is seeking to recover is "privileged and protected from disclosure."

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