Point Lepreau costs could hit $3.3B, PMO memo says

The cost of refurbishing New Brunswick's Point Lepreau nuclear power plant could be as high as $3.3 billion, nearly $1 billion more than previously estimated, a memo for the Prime Minister's Office suggests.

The three-page memo says Atomic Energy of Canada Ltd. won the bid to carry out the work for about $540 million, but the total cost of the project for the federal Crown corporation reached $1.17 billion, resulting in a cost overrun of $638 million.

"While some of these costs resulted from having to construct a replacement tube set for the reactor, the majority of the cost overrun was labour costs," says the Dec. 14, 2012, memo signed by Wayne Wouters, clerk of the Privy Council.

"For the duration of the refurbishment, there were hundreds of highly specialized and costly skilled employees on site required not only for engineering and the overhaul work, but to address the amounting problem-solving challenges AECL faced."

The memo, obtained by The Canadian Press through an access-to-information request, also says NB Power has suggested its cost overruns could amount to more than $1.3 billion, about $300 million more than the provincial Crown utility company acknowledges.

"Some of these costs were driven by the need to source alternative energy during the three-year delay," it says.

"However, most of the costs arose because of the need to maintain the full complement of its specialized employees on site during the refurbishment, and to ensure their continued training and certification."

When the refurbishment began in 2008, it was expected to cost $1.4 billion. But that ballooned as a result of technical problems and delays that extended the project three years longer than scheduled.

NB Power has said the overall cost of refurbishing Point Lepreau was about $2.4 billion, but the figures contained in the memo suggest that could be as high as $3.3 billion when the cost overruns for NB Power and AECL as calculated by the Privy Council are taken into account.

Gatan Thomas, president of NB Power, said his company's estimate of a $1 billion cost overrun is well-documented and he doesn't know how the federal government came up with a $1.3 billion overrun. He declined to comment on the AECL estimates, saying NB Power had a fixed-price contract.

"We completed the project at $2.4 billion and that's the cost to New Brunswickers," Thomas said.

"That's the cost of the project for us."

'Point Lepreau money pit'

Green Party Leader David Coon said he was stunned to hear of the "massive" cost overruns incurred by AECL, adding that it may explain why the federal government has refused to give in to the province's claims for compensation.

"There's no compensation coming to New Brunswick from the federal government when we see these numbers," Coon said.

"I think they've probably decided that they've put enough money down the Point Lepreau money pit."

The New Brunswick government has been pushing Ottawa for years to compensate it for the full share of its cost overruns, arguing that it should not be on the hook for AECL's delays climbing the learning curve of fixing a Candu-6 reactor for the first time.

But Prime Minister Stephen Harper has not budged, saying only that his government will abide by the terms of the contract to refurbish the reactor.

Spokesmen for Premier David Alward and provincial Energy Minister Craig Leonard said neither would comment on the issue. Requests for comment with Harper's office and AECL were not returned.

Thomas said before the province can press Ottawa for compensation, an insurance claim must be settled. He said NB Power and AECL are trying to get a total of about $500 million from a policy that was purchased at the start of the project. However, he said he couldn't be more specific because the matter is before the courts.

"I can say that we are in the discovery phase and things are moving as they can expect in a litigation situation," Thomas said.