NB Power seeks to settle lawsuits over Point Lepreau refurbishment cost overruns

NB Power has agreed to negotiate with its insurers this fall to try and settle multi-million dollar claims for delays and cost overruns during the Point Lepreau refurbishment, even as the utility copes with ongoing performance problems at the rebuilt nuclear plant.

"The parties in the present action have agreed to participate in a mediation in November 2017," wrote NB Power's lead lawyer Kenneth McCullogh in a letter to Court of Queen's Bench clerk Amanda Evans about the dispute late last month. 

"If that effort is unsuccessful we expect the discovery process to be completed by the end of Q2 (June) 2018 and that shortly thereafter the matter will be ready to be entered for trial."

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Eight insurance companies, led by Lloyd's Underwriting, refused to pay for damage to the reactor's outer shell, known as the calandria, when it was improperly polished using coarse wire brushes during the refurbishment in 2009.

The polishing caused microscopic scratching and when new tubes were fitted into the calandria the scratches led to large numbers of the tubes flunking critical air leak tests.

All 380 tubes had to be removed and replaced, a setback that added 22 months to the project and hiked costs by hundreds of millions of dollars.

The insurance companies rejected claims the calandria had been "accidentally physically damaged" by the polishing mistake and instead blamed negligence by NB Power and its contractor Atomic Energy of Canada Ltd. (AECL).

$1B over budget

Lawsuits by both NB Power and AECL were filed 64 months ago and have already dragged on longer than the refurbishment itself, which ballooned into a four and a half year ordeal. It ran three years longer than expected and went $1 billion over budget.

NB Power's claim against the insurers is for $320.1 million — just a portion of the cost overruns encountered during the refurbishment.

New Brunswick Liberals campaigned in 2014 on also pressing Ottawa for compensation, given that AECL was a federal Crown corporation during the refurbishment, but have since declined to answer questions on the subject.

"Pending the conclusion of the insurance claim legal process, we are not able to comment," said Julie Robichaud, Premier Brian Gallant's press secretary, in an email to CBC News in January.

Missing production targets

Lepreau has been operating since November 2012 but has run into a number of problems and consistently missed production targets.

As of March 31 this year it has operated 194 days less than NB Power originally projected for its first five years, costing nearly $200 million in reduced production.

Last week in filings with the New Brunswick Energy and Utilities Board, NB Power lowered expected production from the nuclear plant by a further 136 days over the next 23 years to allow for extra maintenance and unexpected problems.

The utility said it is planning for more future downtime "to reflect a more conservative expected performance" from Lepreau, but the change follows skeptical questions at NB Power's last rate hearing about whether future production targets for the plant were realistic given its track record so far.

NB Power did not immediately respond to questions Thursday about changes it has made to Lepreau's expected long-term performance.