Still fighting: NB Power and AECL enter mediation in long-running Lepreau dispute

Like a disgruntled homeowner chasing a contractor years after a disappointing renovation, NB Power is still pursuing Atomic Energy of Canada Limited for compensation over its refurbishment of the Point Lepreau nuclear generating station nearly a decade ago.   

But there are no signs any of the roughly $800 million New Brunswick claims it is still owed for the error-plagued job will be arriving anytime soon.

"NB Power is currently in the process of discussions with AECL, the objective of which is to reach a fair compromise of the remaining claims arising out of the refurbishment," the utility reported in a disclosure to the Energy and Utilities Board earlier this month.

"The process is being pursued with the assistance of a mediator."

AECL, a federal Crown corporation, was hired by NB Power as the contractor to overhaul Point Lepreau beginning in 2008, as the plant was nearing the end of its initial 25-year lifespan.  

The ambitious renovation had never been attempted on a Candu-6 reactor before, but AECL considered it feasible and developed plans to replace, upgrade or renovate key nuclear and non-nuclear components inside Lepreau to extend its life a further 25 to 30 years.

The work was expected to take 18 months and cost NB Power $1.4 billion but became mired in a number of problems and eventually took three years longer than expected. Those delays pushed costs $1 billion over budget.

Lepreau's poor performance

In addition, the plant has not performed as well as expected following the overhaul.  

In its first seven operational years since coming back online in November 2012, the rebuilt reactor has run at an average of 82 per cent capacity, well below the 91 per cent level NB Power predicted for those early years during hearings in 2013 on that issue.  

That's a production shortfall so far of about $250 million worth of electricity.  

NB Power has also had to spend more than $500 million on capital improvements at Lepreau since the plant came back online, in part to try to improve its spotty post-refurbishment reliability.

There are signs those heavy investments are helping, but the question of who should be financially responsible for the delays and cost overruns of the original refurbishment are still not resolved and have dragged on longer than the refurbishment itself.

NB Power will not say how much compensation it is seeking from AECL but acknowledges in its new disclosure to the Energy and Utilities Board that the two sides are not close to an agreement.

Insurance money

NB Power has even suggested AECL may try and wring money out of the utility by laying claim to part of a settlement NB Power reached with Lepreau insurers in March 2018.

In its update to the EUB, the utility wrote: "There remain substantial areas of dispute between NB Power and Atomic Energy of Canada Limited (AECL) related to the contract price for the retubing agreement, AECL's liability to NB Power for liquidated damages for failure to meet AECL's schedule guarantee, other damages which NB Power claims against AECL as a result of AECL's performance of the retubing and refurbishment work, and potential claims by AECL against NB Power relating to amounts recovered by NB Power as a result of the settlement."

NB Power has still not disclosed how much insurance companies paid it in 2018 under policies it held in relation to the refurbishment troubles.

But one estimate pieced together from public information by UNB accounting professor Matthew Wegener suggested it was close to $160 million.

That would leave $840 million in cost overruns to be collected for full compensation, which has been the official demand of three straight New Brunswick governments headed by premiers Shawn Graham, David Alward and Brian Gallant.

On Wednesday, the office of Natural Resources and Energy Minister Mike Holland did not immediately respond to a question about whether that remains the New Brunswick government's official position.

NB Power says, if it cannot reach an agreement with AECL on who owes what through mediation, it will move on to the next step.

"If this process is not successful, the alternative under the project agreements is to embark upon an arbitration process," it wrote.