Mactaquac dam replacement cost could hit $5B, says NB Power

New figures from NB Power put the cost of replacing the Mactaquac Hydro Generating Station by 2030 as high as $5 billion.

The figures are contained in the utility's filing of its 10-year financial and capital investment plan with the New Brunswick Energy and Utilities Board.

NB Power needs to replace the Mactaquac dam by 2030 due to a condition known as alkali aggregate reaction that has been causing the dam's concrete structures to expand.

The Crown corporation has started evaluating the options for replacing the dam and its hydro generation capacity of 668 megawatts. It is considering three options:

• Repower the dam by replacing the spillway and the powerhouse;
• No continued power generation, maintain the headpond by replacing the spillway but not the powerhouse;
• Remove the spillway, powerhouse and earthen dam.

NB Power puts the minimum cost of each option at $2 billion.

In the document filed with the EUB, NB Power states the first option of repowering the dam "will require an additional investment estimated at $1 billion to $3 billion," but carry the benefit of continued power generation.

The third option - removal of the dam - "could require an additional significant investment," states NB Power in the financial plan, but does not provide an estimate.

"NB Power will explore alternatives to fund, in advance, the minimum cost for all three options. The results of this decision and its impact on rates will be reflected in future updates of the 10-year plan.

"Studies are underway to assess the economic, environmental and social implications of each of the three options."

Replacing the dam and its hydro generation capacity would be the most expensive project undertaken by NB Power.

Its refurbishment of the Point Lepreau Nuclear Generating Station was originally estimated at $1.4 billion, but saw the project finish three years late and $1 billion over budget.

For planning purposes, NB Power says it is estimating timelines using the option to repower the dam as that will take the longest time to implement.

On that basis, NB Power is expected to recommend its preferred option to the provincial government in 2016.

In its financial plan, which uses the Mactaquac repowering option by proxy, NB Power is aiming to reduce its debt by $1 billion and achieve a debt to equity ratio of 80/20 by 2021.

At the close of the 2013-14 fiscal year on March 31, NB Power's debt stood at $5 billion with a debt to equity ratio of 95/5.